The GST Authority for Advance Rulings (AAR – Maharashtra bench) has held a liaison office, in Mumbai, of the Dubai Chamber of Commerce and Industry (DCCI) to be an ‘intermediary’, which is providing services. The AAR concluded that the liaison office is liable to register under the Goods and Services Tax (GST). The supply of services by it will come within the ambit of this tax.
The ruling points out that the liaison office connects business in India, with business partners in Dubai, which is nothing but a supply of services. “By connecting businesses in India, with business partners in Dubai, the applicant is actually arranging or facilitating the supply of goods or services or both, or securities, between two or more persons,” the AAR pointed out in its order. It further stated that as a liaison office the entity in Mumbai is acting on behalf of its head office.
The website of the head office indicates that they accept fees for providing various kinds of services, which include credit rating services and creditworthiness background checks. This shows that DCCI is not a non-profit entity, hence the liaison office also cannot be treated as such, observed the AAR. The AAR also noted that it received consideration from its head office over and above the actual expenses incurred by it.
Given these facts, the AAR held that the liaison office will have to register under GST regulations, its services will be treated as supply and will be subject to GST. The place of supply will be the location of the application (which is Maharashtra).
Applicants impacted by a GST ruling can file an appeal. Further, while rulings do not set a judicial precedent, they do have a persuasive impact in assessing similar cases.
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Source: timesofindia.com
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