Question

An Indian LLP(in which both the partners are US based Companies) is providing Accounting services to its Group Company in Singapore . 1. In this case where would be the Place of supply of service 2. Whether Indian LLP and Singapore Company would be considered as merely establishments of a distinct person This Indian LLP (A) share office space with the another Indian company(B) of the same group. 1. Whether on sharing of Infrastructure cost Indian Company (B) , without any mark up, is liable to charge GST 2. Whether LLP can take refund of GST on Infrastructure cost charged by group company

Answer

For providing Accounting service

1. As per section 13 of IGST your case does not fall in 13(3) to 13(13) so residuary clause i.e. 13(2) will apply and the Place of supply is location of recipient of service i.e. Singapore.

2. Indian LLP and Singapore Company are considered as establishments of distinct persons as per explanation 1 to section 8 of IGST reproduced below:

Explanation 1.''For the purposes of this Act, where a person has,''
(i) an establishment in India and any other establishment outside India;

then such establishments shall be treated as establishments of distinct persons.

For sharing Office space

1. As per section 7 of CGST Act 'supply' includes
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;

Further as per Schedule I clause 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 is treated as supply even if made without consideration.

Therefore Indian Company (B) is liable to charge GST for providing service of sharing infrastructure.

2. Refund is allowed only in two cases as per proviso to section 54 reproduced below:
(i) zero rated supplies made without payment of tax;
(ii) 'where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council
Both the above situations are not applicable in your case, therefore you are not eligible for refund. However LLP can take credit of GST paid.

(Reply dt. 08/06/2018)