Whether providing service by branch office in one State to the head office in another State through employees who are common to the company constitute supply of service in terms of Section 7
Whether providing service by branch office in one State to the head office in another State through employees who are common to the company constitute supply of service in terms of Section 7 of the Act, and if so, whether such services attract GST liability?
Key findings of AAR in the case of Profisolutions Private Limited:
1. It is seen that the applicant from branch office has supplied, apart from accounting services, various technical services to head office in other State where the factory is located to fulfil the product design requirement of the customers.
- It is obvious that service of an employee working in a branch flow only through the branch or head office to the customer. As long as the employee in a branch of an entity, his services that is rendered directly to head office will be in his representative capacity as an employee of the branch.
- Schedule I (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 to be treated as supply even if made without consideration.4. Even the services of employees deployed in a registered place of business to another registered premises of the same person will attract the above provisions as the employees are treated as related persons in terms of explanation to Section 15 and treated as Supply by virtue of Schedule I (2) to CGST Act, 2017.
5. Therefore, services, including services of common employees of a person, provided by a branch office to head office and vice versa, each having separate GST registration, will attract GST liability under GST Acts.