Page 177 - GSTL_6th August 2020_Vol 39_Part 1

2020 ] IN RE : HITACHI POWER EUROPE GMBH 103
2019-ST = 2019 (24) G.S.T.L. J171 (S.C.)] by dismissing the Department’s appeal,
wherein the forum observed the following :
(a) Appellant has deducted tax at source from salary and other perks
given to employees.
(b) Appellant did not pay any direct/indirect consideration to its par-
ent company towards deployment of the employees. Thus, it cannot
be said that there is any agency and client relationship between the
parent company and the appellant.
(c) When the employee/employer relationship exists, the method of
disbursement of salary cannot determine the nature of transaction.
1 2.19 In view of said ruling, tax would not be applicable in cases where
there is employer-employee relationship irrespective of manner of disbursement
of salary by the Holding or Subsidiary Company. Hence Applicant submits that
when a transaction between a Holding Company and Subsidiary Company,
which are treated as two separate legal entities under various Indian laws (i.e.,
The Companies Act, 2017, the Income-tax Act, 2017, the CGST Act, 2017) is itself
exempt from the levy of GST, the same ratio should be applied even in the con-
text of the Head Office and the Project Office, considering the fact that the above
Indian legislation treats the Head Office and the Project Office as single legal en-
tity.
2.20 Applicant, citing the definition of a ‘Project Office’ under FEMA,
1999, has submitted that the Project office is merely a place of business of a For-
eign Company to carry out business in India and does not constitute an estab-
lishment. Head Office and Project Office are not separate establishments under
the GST legislation and would accordingly be not subject to levy of GST. Appli-
cant has also referred to a recent ruling held by the Authority for Advance rul-
ing, Rajasthan in the case of M/s. Habufa Meubelen B.V. [2018 (14) G.S.T.L. 596
(A.A.R. - GST)], in support.
3. Contention - As per the jurisdictional officer :
The jurisdictional officer has not made any written submissions.
4. Hearing
4.1 Preliminary hearing in the matter was held on 17-11-2019. Shri Hari
Sudhan M., Partner, Shri Hariganesh V., Director, appeared, and requested for
admission of their application. Jurisdictional Officer Sh. G. Datta Sainath, Inspec-
tor, Solapur Division (CGST) also appeared.
4.2 The application was admitted and called for final hearing on 11-2-
2020. Shri Hari Sudhan M., Partner, Shri Hariganesh V., Director, Authorized
Representative, appeared and made both, oral and written submissions. Jurisdic-
tional Officer Sh. G. Datta Sainath, Inspector, Solapur Division (CGST) appeared
and made submissions. We heard both the sides.
5. Discussion and findings :
5.1 We have gone through the facts of the case, documents on record
and submissions made by both, the applicant as well as the jurisdictional office.
The basic issue before us is whether a foreign company and its Project Office in
India can be considered as distinct entities or as part of the same entity.

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1 Paragraph number as per official text.
GST LAW TIMES  6th August 2020  177