Karnataka-based Authority for Advance Rulings (AAR) ruled that, “Liaisoning services by the branch office (BO) of a foreign entity in India will draw the goods and services tax (GST), even if transactions between them are without consideration”.
The order came in a case related to business and promotion activities by the Bengaluru-based BO of a head office (HO) incorporated in Germany. Activities performed by the applicant “falls under the scope of supply even in the absence of consideration, as it is in relation to furtherance of business”.
It held that BO and HO will be treated as establishments of distinct persons and the activities performed by them cannot be called export of services. These kinds of services attract 18% GST.