Order date – 31 March 2023

Applicant – Profisolutions Private Limited

Facts –

• The applicant, PROFISOLUTIONS PRIVATE LIMITED, a company registered under the Companies Act 2013 in the State of Karnataka, with a branch office in Chennai registered in the State of Tamil Nadu under the GST Act, provides engineering services for industrial and manufacturing projects.
• The branch office also provides support services such as engineering services, design services, and accounting services to the Head Office in Bangalore, which is registered in the State of Karnataka under GST Act.
• The company claims that the employees appointed and working for the company as a whole and not employed for the head office or branch specifically, which is a distinct person under GST.
• The applicant filed an advance ruling application for the determination of the liability to pay tax on service provided to the head office.

Issue –

• Whether providing service by a branch office in one State to the head office in another State through employees who are common to the company constitutes the supply of service in terms of Section 7 of the Act, and if so, whether such services attract GST liability?

Order –

• The authorities observed that the Company has supplied various technical services apart from accounting services to the head office, and the employees of the company who work in the branch, are deployed to work for the head office.
• If the employee is deployed in a branch of an entity, his services that are rendered directly to the head office will be in his representative capacity as an employee of the branch. Supply includes 'the activities specified in Schedule I, made or agreed to be made without consideration' as per Section 7(1) (c).
• The Schedule (2) to CGST Act, 2017 states that supply of goods or services or both between related persons or between distinct persons as specified in Section 25 when made in the course or furtherance of business is subject to GST liability.
• Therefore, service provided to the Head Office by the branch office of the company will attract GST liability as per para (2) of Schedule I of CGST Act, 2017.

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