Partially modify the ruling passed by the Maharashtra Advance Ruling Authority Vide Order No GST-ARA-66/2018-19 B-162 dated 19.12.2018, and answer the questions, raised by the Appellant in their Appeal filed before us, as under:
1. Whether availment of common input supplies on behalf of other unit/units registered as distinct person and further allocation of the cost incurred for same to such other units qualifies as supply and attracts levy of GST?
Yes, availment of common input supplies from the third-party service vendors/suppliers on behalf of the Branch Offices/Units, registered as distinct persons will qualify as supply of services in accordance with the provision of Section 7(1)(a) of the CGST Act, 2017. However, the cost of the said common input services availed on behest of Branch Offices/Units and allocated to the Branch Offices/Units by the Head Office will not attract the levy of GST as the said costs have been incurred by the Head Office in the capacity of a pure agent of the Branch Offices/Units, and as such, the said cost incurred by the Head Office shall be excluded from the value of supply of the facilitation services.
2.If GST is leviable, whether assessable value can be determined by arriving at nominal value?
The assessable value of the services provided by the Head Office to the branch offices/units can be determined as per the the second proviso to clause(c )of Rule 28 of the CGST Rules, 2017, which provides that value of the tax invoice will be deemed as the open market value of the services.
3. Once GST is levied and ITC thereof is availed by recipient unit, whether the Applicant is required to register itself distribution of ITC on common input supplies?
Since, the Head Office is not entitled to avail and utilize the credit of tax paid to the third-party service vendors for the common input services received by it on behalf of the Branch Offices/Units as the said common input services received by the Appellant's Head Office are being used or consumed by the Branch Offices/Units in the course or furtherance of their businesses, and not by the Head Office. Therefore, the Appellant is bound to take the ISD registration as mandated by section 24(viii) of the CGST Act, 2017, and comply with all the provisions made in this regard, if it intends to distribute the credit of tax paid on the common input services received by it, on behalf of the branch offices units, to the branch offices/units.