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TMI BlogClarification regarding taxability of services provided by an office of an organisation in one State to the office of that organisation in another State, both being distinct persons.X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in one State to the office of that organisation in another State, both being distinct persons. Madam / Sir, The Government of India, Ministry of Finance, Department of Revenue, Tax Research Unit vide Circular No. 199/11/2023 GST dated 17th July, 2023 has issued a clarification regarding taxability of services provided by an office of an organisation in one State to the office of that organisation in another State, both being distinct persons, in order to ensure uniformity in the implementation of the provisions of law across the field formations, which is annexed herewith. In exercise of powers conferred by section 168 of the Tripura State Goods and Services Tax Act, 2017 (Tripura Act No. 9 of 2017) for the purpose of uniformity in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcise of its powers conferred under section 168(1) of the CGST Act hereby clarifies the issue in succeeding paras. 2. Let us consider a business entity which has Head Office (HO) located in State-1 and a branch offices (BOs) located in other States. The HO procures some input services e.g. security service for the entire organisation from a security agency (third party). HO also provides some other services on their own to branch offices (internally generated services). 3. The issues that may arise with regard to taxability of supply of services between distinct persons in terms of sub-section (4) of section 25 of the CGST Act are being clarified in the Table below: - S.No Issues Clarification 1. Whether HO can avail the input tax credit (h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C to BOs in respect of such common input services through the ISD mechanism as per the provisions of section 20 of CGST Act read with rule 39 of the CGST Rules, HO is required to get itself registered mandatorily as an ISD in accordance with Section 24(viii) of the CGST Act. Further, such distribution of the ITC in respect a common input services procured from a third party can be made by the HO to a BO through ISD mechanism only if the said input services are attributable to the said BO or have actually been provided to the said BO. Similarly, the HO can issue tax invoices under section 31 of CGST Act to the concerned BOs, in respect of any input services, procured by HO from a third party for on or behalf of a BO, only if the said service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly, in respect of supply of services by HO to BOs, the value of the said supply of services declared in the invoice by HO shall be deemed to be open market value of such services, if the recipient BO is eligible for full input tax credit. Accordingly, in cases where full input tax credit is available to a BO, the value declared on the invoice by HO to the said BO in respect of a supply of services shall be deemed to be the open market value of such services, irrespective of the fact whether cost of any particular component of such services, like employee cost etc., has been included or not in the value of the services in the invoice. Further, in such cases where full input tax credit is available to the recipient, if HO has not issued a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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