The activities of the liaison office do not amount to supply of services. The liaison office is not required to be registered under GST as there is no taxable supply.
Classification of supply— Section 7 of CGST Act— In the instant case, the core issue before us is whether the activities of the Liaison Office will amount to a supply in terms of the GST law and whether such liaison office is liable to be registered for payment of GST.
In this case, the Appellant has been granted permission by RBI vide letter dated 11-06-2014 to act as a liaison office for its Head office in Germany. We find from the records that the parent company in Germany is engaged in promoting applied research and development for the benefit of industry and society.
In this case, there is only one legal entity i.e the company in Germany and the liaison office in India is only an extension of the foreign company having no separate identity in India. We disagree with the findings of the lower authority that the liaison office is an 'artificial juridical person' and that the business conducted by it comes within the purview of the definition of business stated in Section 2(17) of the CGST Act. Artificial juridical persons are not natural persons but separate entities under law. As observed by us, the liaison office is not a separate entity under law. It is merely an extension of the parent company in Germany. When the liaison office is not a 'person' recognised as per law, the question of being a related person to the parent company does not arise. Thus, the finding of the lower Authority that the parent Company in Germany and the Appellant liaison office in India are deemed to be related persons is not correct.
Held that— We set aside the advance ruling and answer the questions raised by the Appellant in the original advance ruling application and in this appeal, as follows:
1. The activities of the liaison office do not amount to supply of services.
2. The liaison office is not required to be registered under GST as there is no taxable supply.
3. The liaison office is not liable to pay GST.