In re Dubai Chamber of Commerce and Industry-Liaison Office (GST AAAR Maharashtra)
GST is leviable on services provided by the Liaison Office to the Foreign Head Office (HO)- Dubai Chamber Liaison office to pay GST on activities on behalf of DCCI UAE: AAAR
The AAAR, Maharashtra in Dubai Chamber of Commerce and Industry [Order No. MAH/AAAR/AM-RM/08/2022-23 dated June 23, 2022] has modified the order of the AAR, to the extent that, the activities performed by the Liaison Office (“LO”) acting as link for communication, at the behest of foreign Head Office, cannot be considered as an intermediary. Held that, such activities will come under the ambit of “Supply”, for which LO is liable to pay the Goods and Services Tax (“GST”) and required to take GST Registration to discharge their liability, on the amount received from the Head Office.
Facts:
Dubai Chamber of Commerce and Industry (“the Appellant or DCCI LO”) is the LO of the Dubai Chamber of Commerce and Industry, Dubai (“the Head Office”) that provides services for connecting business partners in Dubai with businesses in India for a consideration from the Head Office. The Appellant is a non-profit organization, formed to represent, support and protect the interests of the Dubai business community in India, by creating a favourable environment, promoting Dubai businesses and supporting the development of business in India, wherein the Appellant undertakes certain liaison/representation activities in India, attending and representing the Head Office in various seminars, conferences & trade fairs, connecting businesses in India with business partners in UAE and vice versa, and organizing events & interactions with Indian stakeholders for sharing information about Dubai.
This appeal has been filed by the Appellant challenging the ruling passed by the AAR, Maharashtra vide Advance Ruling No. GST-ARA-35120 I9-20/B-14 dated May 24, 2021, holding that, that the activities undertaken by the Appellant will tantamount to those of “intermediary” as the Appellant is arranging and facilitating the supply of goods or services or both between the LO and the Head Office by connecting them by way of introductions/references, and therefore such activities will be covered under the ambit of “Supply” as provided under Section 7 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”), and accordingly, the Appellant are required to take GST registration and discharge their GST liability on the amount received from their Head Office. Further, it was held that, the Appellant is receiving consideration from the Head Office in excess of expenses incurred by it, and the Appellant cannot be treated as a non-profit organization.
The Appellant contended that neither the Appellant nor the Head Office is receiving any sort of consideration in the form of a fee or commission from any company in India for acting as a link between the LO and the Head Office. Further, all the expenses incurred by the Appellant (predominantly office rent, salaries, and consultancy services), are to be reimbursed from the Head Office on a cost-to-cost basis. Thus, no consideration is to be charged/ paid for such activities.
Issues:
1) Whether the activities performed by the Appellant shall be treated as supply under the GST?
2) Whether the activities undertaken by the Appellant at the behest of their Dubai Head Office can be construed as that of an “intermediary”?
3) Whether the Appellant is required to obtain the GST registration?
4) Whether the Appellant is required to pay the GST.
Held:
The AAAR, Maharashtra in Order No. MAH/AAAR/AM-RM/08/2022-23, held as under:
