Levy of GST— The present appeal has been filed against the Advance Ruling passed by the Maharashtra Authority for Advance Ruling.

The moot Issues, before this authority, are as under:

(i) Whether the Appellant’s activities of providing facilitation services to their branch offices/units by way of availment/procurement of common input services from third party vendors on behalf of their branch offices/units. wherein the tax invoices for the common input services were raised in the name of the Appellant’s Head Office and expenses for the same were incurred by the Head Office itself, and subsequently the entire expenses incurred by it including the total cost of the common input services and the other administrative expenses like employee salary cost, etc., were allocated, will be considered as supply or otherwise and whether the same would attract GST or not.

(ii) Whether they are eligible to utilize the credit of Tax paid for the common input services received on behalf of its branch offices/units.

(iii) Whether they have to be compulsorily registered as an ISD in accordance with Section 24(viii) of the CGST Act, 2017, under the circumstances as detailed above.

(iv) What will be the valuation of the services provided by the Head Office to its branch offices/units and whether the allocation of the cost of the employees salary by the Head Office/Corporate Office to the branch offices would attract levy of GST.

Held that— In respect of question no.1, availment of common input supplies from the third-party service vendors/suppliers on behalf of the Branch Offices/Units, registered as distinct persons, will qualify as supply of services in accordance with the provision of Section 7(1)(a) of the CGST Act, 2017. However, the cost of the said common input services availed on behest of Branch Offices/Units and allocated to the Branch Offices/Units by the Head Office will not attract the leys of GST as the said costs have been incurred by the Head Office in the capacity of a pure agent of the Branch Offices/Units and as such, the said cost incurred by the Head Office shall be excluded from the value of supply of the facilitation services.

In respect of question no. 2, The assessable value of the services provided by the Head Office to the branch offices/units can be determined as per the second proviso to clause (c) of Rule 28 of the CGST Rules, 2017. which provides that value of the tax invoice will be deemed as the open market value of the services.

In respect of question no. 3, Since, the Head Office is not entitled to avail and utilize the credit of tax paid to the third-party service vendors for the common input services received by it on behalf of the Branch Offices/Units as the said common input services received by the Appellant’s Head Office are being used or consumed by the Branch Offices/Units in the course or furtherance of their businesses, and not by the Head Office. Therefore, the Appellant is bound to take the ISD registration as mandated by section 24(viii) of the CGST Act, 2017 and comply with all the provisions made in this regard, if it intends to distribute the credit of tax paid on the common input services received by it on behalf of the branch offices/units to the branch offices/units.