Advance Ruling- Supply of Service- The Applicant registered under the Companies Act 2013 in the State of Karnataka, have branch office at Chennai and the branch office is registered in the State of Tamil Nadu under GST Act for providing engineering services for industrial and manufacturing projects.The branch office of the applicant is providing support services like engineering services, design services, accounting services, etc to the Head Office at Bangalore and also registered in the State of Karnataka under GST Act. On interpretation of law, applicant states that employees are appointed and working for the company as whole and not employed for head office or branch specifically, which is a distinct person under GST. Salary and benefits paid to employees are in relation to employment, which is neither a supply of goods nor services under para 1 of the schedule 3 of CGST Act, which reads as 'Services by an employee to the employer in the course of or in relation to his employment'.
The question which needs to be answered is whether providing service by branch office in one State to head office in another State through employees who are common to the company constitute supply of service in terms of Section 7 the Act, if so, whether such services attract GST liability.
Authority for Advance Ruling, Tamil Nadu held that:- From comprehensive reading of the statutory provisions of relevant Acts, any supply of service between two registrations of the same person in the same State or in different States attract the provisions of Section 25 (4) and Section 7 read with Schedule I (2) and Section 15. Even the services of employees deployed in a registered place of business to another registered premises of the same person will attract the provisions discussed in para 8.6 supra, as the employees are treated as related person in terms of explanation to Section 15 and treated as supply by virtue of Schedule I (2) to CGST Act, 2017.
Services, including the services of common employees of a person, provided by branch office to head office and vice versa, each having separate GST registration, will attract GST liability under respective Acts, viz IGST Act, 2017 or CGST Act, 2017 and SGST Act, 2017 or UTGST Act, 2017.