The liaison office is not liable to pay GST on reimbursements received from HO.
Levy of GST— In the instant case, questions on which advance ruling is required are as follows—
1. Whether the reimbursement of expenses and salary paid by Wilhelm fricke se, Germany to the liaison office established in India is considered as supply of services as per Section (7) of the CGST Act, 2017 or under Schedule I of CGST Act, 2017, especially when no consideration is charged/ paid.
2. Weather the applicant i.e. the Liaison Office is required to get registered under GST?
3. Whether the applicant i.e. LO is required to pay CGST/SGST/IGST, as the case may be, on reimbursement received from HO?
Held that—When the applicant/liaison office is working as per the terms and conditions as mentioned above, the reimbursement of expenses and salary paid by IVI/s Wilhelm fricke se to the liaison office, does not fall under service, as no consideration for any services is being charged by the liaison office. Further, the kind of reimbursement claimed by them from their HO is also falling out of the purview of supply of service and as there are no such taxable supplies made by the Liaison office.
The liaison office is strictly prohibited to undertake any activity of trading, commercial or industrial nature or entering into any business contracts in its own name. Also the reimbursement claimed by them from their HO is also falling out of the purview of supply of service. As there are no taxable supplies made by the Liaison office, they are not required to get registered.