The handling and administration services through the corporate office to the group organizations along with the other construction location enrolled in distinct states acknowledge as the source of services and is subject to be taxed beneath GST stated by the Maharashtra Authority for Advance Ruling (MAAR).
The ruling seems to be the next step from Karnataka’s AAR ruling towards the concern of the Bengaluru-based Columbia Asia Hospitals in which the services through the team in the main office for branches in other states will liable for GST. This was rule through Appellate Authority and is due prior to the Karnataka High Court, which has posted the subject dated 27th September.
The petitioner and the jurisdictional officer are bound up with AAR rulings they can be referred upon the same concern. Indeed the tax council takes attention to the rulings in amendment of the laws. The experienced ones see that the ruling of the MAAR has some serious issues for the organizations that have offices and employees in distinct cities.
Registration Done Individually
From the last example, Pune-based BG Shirke Construction Technology Private Limited supplies handling and leadership services to the branch office and group firms, that are different and concerned individuals, respectively, and obtains fixed monthly charges correspondingly. The question on which the ruling seeks were managerial and leadership services given to the enrolled office to its group first can be recognized as the supply of services if the entire amount imposed through the head office is subjected to GST.
AAR noted that the only reason the applicant feels that such services are not taxable is that they are treating their group companies as well as their site offices as employees. However, this was not accepted.
“The site offices are independent offices separately registered under GST laws. Similarly, the group companies are also separately registered under GST laws since both the site offices as well as group companies cannot be treated as employees, it comments during a ruling that the services through the petitioner are subjected to tax beneath GST laws. The applicant will have to pay GST on the lump sum charged by them to their Group Companies,”
Challenged Practically
Tax expert commented that the early announcement is on the lines of the before Karanataka AAR (Authority for Advance Rulings) held on Columbia Asia postpone the logic for the small to group firms. “This ruling will have severe repercussions for corporates operating through a network of multiple companies, whereby tax is payable on managerial and leadership services supplied from the corporate office to all group companies. Accurate valuation and estimation of such administrative and leadership services on a monthly/quarterly basis will be a practical challenge, he added.”
