|
Case Title |
Prettl Automotive India (P) Ltd |
|
Court |
Appellate Authority for Advance Ruling, Maharashtra |
|
Honorable Judges |
Member Rajeev Kumar Sharma and Member Sanjeev Kumar |
|
Citation |
2021 (03) GSTPanacea 85 HC Maharashtra MAH/AAAR/RS-SK/35/2020-21 |
|
Judgement Date |
22-March-2021 |
|
Council for Petitioner |
Mr Deepak Naik |
|
Council for Respondent |
Not applicable |
|
In favour of |
Revenue |
|
Section |
Under Section 97, 2(6), 2(93)(a), 13(3)(b), 101 of the CGST Act, 2017 |
The Appellate Authority for Advance Ruling, Maharashtra bench of Member Rajeev Kumar Sharma and Sanjeev Kumar, held that the allocation and recovery of the salary of the employees of the head office from the branch office/units will be subject to GST.
FACTS OF THE CASE
Prettl Automotive India (P) Ltd approached the Authority for Advance Ruling (“AAR”) requesting for a ruling on three questions – (i) whether availing ITC of common input supplies on behalf of other units/units registered as distinct persons and further allocation of the cost incurred to such other units qualifies as supply and attracts GST, (ii) whether a nominal value can be adopted for charging the GST and (iii) whether obtaining ISD registration is mandatory?
The MH AAR held the activity of availing ITC of common input supplies on behalf of other state branches qualifies as a supply; obtaining registration is mandatory; and the valuation should be done basis 110% of the cost under Rule 30 of CGST Rules. Prettl Automotive India (P) Ltd also made some additional submissions during the proceedings regarding exclusion of salary of employees based at HO for the purpose of valuation, but the AAR did not touch upon this aspect in its order.
Prettl Automotive India (P) Ltd filed an appeal before the AAAR challenging the order on the grounds that AAR should have clarified on the non-inclusion of employee’s salary for computing the valuation under the 110% rule. Further, some new queries were raised like whether the HO can avail the ITC of GST paid in such common input services.
COURT HELD
The AAAR held that the activity of the HO availing ITC for common input supplies on behalf of the company’s branch offices/ units does qualify as supply and would attract the levy of GST. The AAAR also held that the HO is not entitled to avail the ITC of such common input supplies and thus needs to register itself as an ISD as per Section 24 of the CGST Act, 2017 and distribute such availed common ITC to the company’s branch offices/ units. On the aspect of valuation and inclusion of salary of employees, the AAAR held that the valuation should be determined as per the second proviso of Rule 28(c) of CGST Rules, which provides for adoption of invoice value as the open market value in case the recipient is able to avail full ITC of the GST so charged. As regards the salary of HO employees AAAR observed that since the supply is made by the HO to its branch offices/ units, salary of employees of HO should also be allocated.
ANALYSIS OF THE JUDGEMENT
As per the above case we analyse that availment of common input supplies on behalf of other unit/units registered as distinct person will qualify as supply of services
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Prettl Automotive India (P) Ltd
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