Page 21 - GSTL_ 28th May 2020_Vol 36_Part 4

2020 ] WHETHER SERVICES PROVIDED TO A FOREIGN COMPANY BY PROJECT OFFICE J81

WHETHER SERVICES PROVIDED TO A FOREIGN COMPANY BY PROJECT OFFICE
WHETHER SERVICES PROVIDED TO A
FOREIGN COMPANY BY PROJECT OFFICE
IN INDIA IS LIABLE TO GST?
WHETHER SERVICES PROVIDED TO A FOREIGN COMPANY BY PROJECT OFFICE
By
Ramesh Chandra Jena, B.A. (Hons.), M.A. (Eco.),
D.M.M., LL.B.
ADVOCATE & TAX CONSULTANT

Taxable event is ‘supply’ under GST and as per
Section 7 of the Central Goods and Services Tax Act, 2017
all forms of supply of goods or services or both as sale or disposal made or
agreed to be made for a consideration by a person in the course or furtherance of
business is subject to levy of GST including activities specified in Schedule I of
the Central Goods and Services Tax Act, 2017, except for activities or transactions
specified in Schedule III of the Central Goods and Services Tax Act, 2017.
The present article analyses a case study, where a foreign company has
entered into a contract with a company “B” to execute a project in India and ac-
cordingly foreign company opened a project office in India and project office re-
ceives funds from its foreign company; the transactions between foreign compa-
ny and its project office are duly reflected in books of account of the project of-
fice.
Now, the moot question arises whether services provided to a foreign
company by its own project office in India is liable to pay GST? This is answered
by the Advance Ruling as under :
In Re : Hitachi Power Europe GmbH, reported in 2019 (116) taxmann.com
102 (A.A.R. - Uttar Pradesh.) vide Order No. Nil, dated 11-9-2019.
Brief facts
The applicant (Hitachi Power GmbH), a foreign company incorporated
under the laws of Germany, has entered into a contract with one ‘B’ to execute a
project in India. It has opened a project office in India to undertake/complete the
contractual obligations. The applicant sought advance ruling in respect of the
following question :
Whether the Goods and Services Tax is applicable on the accounting en-
try made for the purpose of Indian accounting requirement in the books
of account of Project Office for salary cost of Expat employees?
Submission of the applicant
(1) Project Office is not a separate legal entity and merely an extension
of Head office, these Expat employees are employees of project of-
fice.
(2) The VISA has been issued by the Indian Bureau of Immigration by
mentioning the name of Head Office i.e. ‘Hitachi Power Europe
GmbH’ under the column ‘Organizational Name’ with the address
of the Project Office in India.

GST LAW TIMES  28th May 2020  21