Overseas Entity liable for GST registration as Deputation of Staff at India’s site qualifies as a Fixed Establishment – AAR Odisha
by ReinHeads Team | Dec 29, 2020
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AAR Odisha* – Overseas Entity liable for GST registration as Deputation of Staff at India’s site qualifies as a Fixed Establishment
| Facts |
- Tokyo Electric Power Company, Holding Inc., Japan (‘the Applicant’) is a foreign company and entered into a long-term agreement (for a period of 46 months approx.) with Odisha Power Transmission Corporation Limited (‘OPTCL’) for providing consultancy services
- For providing consultancy services to OPTCL, the Applicant would depute support staff/ experts at the OPTCL’s project site in India and OPTCL would provide office to the said staff
- The Applicant does not have any office in India, either owned or rented
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| Issue before the Authority for Advance Ruling, Odisha (‘the AAR’) |
- Whether the Applicant is required to be registered under the Odisha Goods and Services Tax Act, 2017 and Central Goods and Services Tax Act, 2017 for the consultancy services rendered to OPTCL?
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| Discussion and Findings of the AAR |
· While analysing the provisions pertaining to the ‘location of supplier’ under the Integrated Goods and Services Tax Act, 2017 (‘the IGST Act), the AAR made the following observations:
- ‘Location of supplier of service’ is defined under Section 2(15) of the IGST Act to include ‘location of a fixed establishment’, when supply is made from a place other than the place of business for which registration has been obtained
- ‘Fixed establishment’ under Section 2(7) of the IGST Act has been defined to mean a place (other than the registered place of business) which is characterised by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services or to receive and use services for its own needs
- The Applicant’s staff/ experts for providing consulting services maintains suitable structure and sufficient degree of permanence in terms of human and technical resources at the site of OPTCL
- The Applicant through its staff/ experts supplies services at project site in India (i.e., location of OPTCL) which qualifies as ‘fixed establishment’ of the Applicant and hence the location of the supplier shall be the location of the fixed establishment i.e., India.
· Based on the same, the AAR held that:
- Supply of consulting service by the Applicant to OPTCL does not qualify as ‘import of service’ in the hands of OPTCL
- The Applicant should be treated as supplier located in India and is required to take registration under the GST Law for providing the consultancy services to OPTCL.
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*Advance Ruling Order No. 02/ODISHA-AAR/2020-21 dated 19 November 2020 (The Authority for Advance Ruling, Odisha) |
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