The authority for advance rulings (AAR), Maharashtra has clearly mentioned its stance that the liaison office (LO) in India, headed by the World Economic Forum is not biased and accountable to incur the goods and service tax (GST) due to no further augmentation of the business. WEF’s liaison office is a public interest, not-for-profit organisation, set up to aid and assist the forum to commence fourth industrial revolution activities in India.
AAR asserted that since the services rendered by the LO from its head office are not been utilized in the due course of business operations, it is not liable to pay GST on the mentioned transactions. The LO can undertake only those activities that get a green signal from the Reserve Bank of India (RBI) for its establishment.
Additionally, the applicant need not register himself in India under the Central GST Act, AAR stated.
Earlier AARs had given divergent rulings depending on the nature of the work of liaison offices.
“Therefore, one needs to understand the exact nature of activities undertaken in India and evaluate whether the LO qualifies as an intermediary, before finalizing the tax position,” said Harpreet Singh, indirect tax partner at KPMG.
In the hindsight, Maharashtra Dubai Chamber of Commerce and Industry in relation to AAR had concluded that the LO of the chamber has to pay GST as it confers services of the associated chain of business partners in Dubai with businesses across India, with an assent from the Dubai Head Office (HO). As stated by AAR guidelines, it is an intermediary as identified under the Integrated GST Act.
Abhishek Jain, the tax partner at EY, averred,” The ruling provides requisite clarity on non-levy of GST on such offices which are restricted to conduct any business activity under the regulations.”
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