Often there is chaos whether GST is applicable to the foreign company or the Indian subsidiary of the foreign company. The Tamil Nadu AAAR passed a ruling that the GST is leviable on Credit card expenses incurred by employees of an Indian subsidiary of a foreign company.
The appellant is “Messrs ICU Medical LLP” which is engaged in the trade of “software development” for the infusion system that is manufactured by its Holding company “ICU Medical Inc.” that has its principal place of business in the United States of America.
The appellant “Messrs ICU Medical LLP” had sought the advance ruling on the matter of whether GST can be charged on the reimbursement of expenses from the subsidiary company to its ultimate Holding company that is based in a foreign territory outside the purview of India.
The AAAR passed a ruling that the applicant has a liability to pay IGST on the ‘Wellsone Commercial Card’ expenses paid by the applicant to its Ultimate Holding company, ICU Medicals Inc. that has its place of business in the USA under Reverse Charge basis. In addition, The AAR held that the applicant has a liability to pay IGST of 18% under Reverse Charge.
The Coram of G.V. Krishna Rao and M.A. Siddiqui held that Credit card expenses incurred by employees of an Indian subsidiary comes within the domain of Goods and Services Tax.
The AAAR ordered the imposition of GST on the reimbursing of expenses to the Holding Company. And further The payment on behalf of the subsidiary company results in advance consideration towards the services provided by the subsidiary company.
