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#GSTCase-230-Compilation for reference on subject relating to Location of Supplier of Services; Who is a recipient in GST; Taxability of reimbursement of expenses and salary paid by Head Office to the liaison office; What is meant by “ordinary course of business”

Case-1-Habufa Meubelen B.V. [2018] 95 120 (AAR- RAJASTHAN)- Taxability of reimbursement of expenses and salary paid by M/s. Habufa Meubelen B.V to the liaison office
6.1. As submitted by the applicant, they are working as the Indian Office of M/s. Habufa Meubelen B.V. which is established as a Liaison Office with the prior permission of RBI. Except proposed liaison work, this office in India would not undertake any activity of trading, commercial or industrial nature nor would they enter into any business contracts in its own name without RBIs prior permission. There is no commission/fees being charged or any other remuneration being received/income being earned by the office in India for the liaison activities/services rendered by it.
6.2 The HO, Netherlands reimburses the expenses incurred by the applicant for their operations in India which are in the nature of salary, rent, security, electricity, travelling etc. The applicant does not have any other source of income and it is solely dependent on the HO for all the expenses incurred by the applicant, which are subsequently reimbursed by the HO. Therefore the HO and Liaison Office cannot be treated as separate persons. Since, HO and Liaison Office cannot be treated as separate persons, there cannot be any flow of services between them as one cannot provide service to self and therefore, the reimbursement of expenses made by the HO cannot be treated as a consideration towards any service.
6.3 The amount received from HO are the funds for payment of salary, reimbursement of expenses like rent, security, electricity, travelling, etc. No consideration is being charged by the applicant from the HO for such services.
6.4 Further the liaison office is strictly prohibited to undertake any activity of trading, commercial or industrial nature or entering into any business contracts in its own name. Also the reimbursement claimed by them from their HO is also falling out of the purview of supply of service. As there are no taxable supplies made by the Liaison office, they are not required to get registered.
6.5 In view of the submissions made by the applicant and as discussed in above paras, when the applicant/liaison office is working as per the terms and conditions as mentioned under paras 1.1 to 1.5 above, the reimbursement of expenses and salary paid by M/s. Habufa Meubelen B.V to the liaison office, is not liable to GST, as no consideration for any services is being charged by the liaison office. Further, the kind of reimbursement claimed by them from their HO is also falling out of the purview of supply of service and as there are no such taxable supplies made by the Liaison office, they are not required to get themselves registered under GST.
Case-2- Para 5.3.5 of the CBEC Educational Guide issued in June 2012 throws light on what would be the ordinary course of business:
“It may be noted that the service provider is not required to make any extraordinary efforts to trace the address of the service receiver. The address should be available in the ordinary course of business.”
Thus, the address available with the supplier normally would be treated as the ordinary course of business. Supposedly, a person goes to shopping mall and purchases goods in cash and normally wherein the goods are purchased in cash, person who bills the goods does not ask for the name and address of the person. In such case, the person would not be required to make extraordinary efforts for obtaining the address of the customer of the business.
However, if any law in the country brings the provision that address of the customer has to be mandatorily captured in the transaction, then address of the business has to be on record. Normal course of business would be deemed to be the fact that business should possess addresses in each and every case of supply made by them.
Case-3- Jaimin Engineering (P.) Ltd. [2018] 97 195 (AAR- RAJASTHAN)-Location of Supplier of Services
While supplying services if the supplier of services (i.e. applicant who in the given case is a Works Contractor and is registered in State of Gujarat) has any place of business/office in the State of Rajasthan i.e. has a fixed establishment for operation in State of Rajasthan (place where the services are to be provided) then he is required to get himself registered in State of Rajasthan.
Case-4- T & D Electricals (AAR-KARNATAKA)-Location of Supplier of Services
In the instant case, the applicant intends to supply goods or services or both from their principle place of business, which is located in Rajasthan. The applicant has only one principle place of business, for which registration has been obtained and does not have any other fixed establishment other than the principle place of business, as admitted by the applicant. Therefore the location of the supplier is nothing but the principle place of business which is in Rajasthan. Thus there is no requirement for a separate registration in Karnataka for execution of the contract referred supra.
Case-5- Swapna Printing Works (P.) Ltd. [2020] 115 130 (AAR-WEST BENGAL)-Who is a Recipient
Facts- The Applicant, stated to be engaged primarily in the business of printing, seeks a ruling on whether the activities undertaken by procuring orders from a foreign buyer to print texts and thereafter deliver them to various places in India is a taxable transaction.
Held- The Applicant, while developing the above line of argument, fails to appreciate the true meaning of the terms ‘recipient’, as defined under section 2(93) of the GST Act. It is an exhaustive definition, implying it can neither be expanded or reduced. In the context of a supply involving payment of consideration, a ‘recipient’ of supply of goods or services means the person who is liable to pay the consideration and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied. The ‘recipient’ is, therefore, so defined as to make separation impossible between the person to whom the supply is made and the one liable to pay the consideration. Of course, when no consideration is involved, as under clause (c) of the above section, the recipient can only be the person to whom the service is rendered. The person who receives the supply in India should, therefore, be considered as the recipient, being inseparable from the foreign buyer as far as the Applicant’s supply is concerned.
3.6 It follows from the above discussion that the Applicant supplies the composite printing service to the recipient located in India. Such supplies are not, therefore, export of services within the meaning of section 2(6) of the IGST Act, 2017. It is taxable under SI No. 27(i) of Notification No. 11/2017 – CT (Rate) dated 28-06-2017 (corresponding State Notification No. 1135 – FT dated 28-06-2017) or Sl No. 27 of Notification No. 8/2017 – IT (Rate) dated 28/06/2017, as the case may be.
Case-6- Maninder Singh [2020] 120 341 (AAR-WEST BENGAL)-Who is a recipient
Facts- Government of India and The Government of Bangladesh have signed a Memorandum of Understanding for construction of an oil pipeline from Siliguri in India to the depot of the Bangladesh Petroleum Corporation (hereinafter BPC) at Parbatipur in Bangladesh. The work will be monitored by Ministry of External Affairs (hereinafter called “MEA”), Government of India, which has engaged M/s Numaligarh Refinery Ltd (hereinafter called “NRL”) as the implementation agency. NRL has awarded the applicant the contract for the installation of the pipeline by HDD method.

Held-NRL has awarded the contract to the applicant for construction of the pipeline in Bangladesh and pays the consideration. NRL is, therefore, the recipient in terms of section 2(93)(a) of the GST Act. A strip of land extending over more than a hundred kilometre is not a fixed establishment in terms of section 2(7) of the IGST Act. Location of the recipient in the present context cannot, therefore, be determined by applying the provisions under section 2(14) (b) or (c) of the IGST Act. NRL being registered and resident of India, the location of the recipient of the service shall be in India in terms of section 2(14)(d) of the IGST Act. The place of supply of the service should, therefore, be determined in terms of proviso to section 12(3)(a) of the IGST Act for carrying out the construction work of immovable property. It shall be in India, being the location of the recipient. The applicant’s service will not, therefore, be the export of service within the meaning of section 2(6) of the IGST Act.