QUESTION

A manufacturing company has factory in Delhi and in UP. Both are registered under GST. The Delhi unit is also treated as Head Office. If CA service is received at Delhi unit registration, Can we distribute such service to both units without taking ISD registration number. If not possible then please suggest the procedure for ITC .

ANSWER

Facts of the case: A manufacturing company has factory registered in Delhi and in UP. If CA service is received at Delhi unit registration, can ITC be distributed to both units without taking ISD registration number.

Law Applicable: SECTION 25 OF CGST ACT

(4) A person who has obtained or is required to obtain more than one registration, whether in one State or Union territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act.

(5) Where a person who has obtained or is required to obtain registration in a State or Union territory in respect of an establishment, has an establishment in another State or Union territory, then such establishments shall be treated as establishments of distinct persons for the purposes of this Act.

SCHEDULE I OF CGST ACT

2. Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business

Reply: Yes, Delhi unit will raise an invoice to other unit for business support service for the average cost of Head Office with all common expenses.

As per section 25(4) both the units will be treated as Distinct persons. Further supply even without consideration between distinct persons is taxable as per clause (2) of Schedule I of CGST Act. (Reply dt. 09/06/2021)