GST Registration Requirement for a Liaison Office

Summary: A liaison office (LO) functions solely as a communication bridge between a company’s head office and its stakeholders without engaging in commercial activities. Under the GST Act, registration is mandatory only when a taxable supply of goods or services is made from a location and the aggregate turnover exceeds the prescribed threshold. Section 23(1) exempts entities from registration if they exclusively engage in activities not subject to GST. If the Noida office in question operates solely as a support office, handling administrative functions and not generating revenue, raising invoices, or providing taxable supplies, it does not require separate GST registration. Instead, it can be added as an “Additional Place of Business” to the Delhi office’s GST registration under GST REG-14. However, if the Noida office begins providing services, raising invoices, or performing activities classified as taxable supply, GST registration would become mandatory. Case law, including rulings such as those by the Karnataka AAR (Fraunhofer-Gesellschaft, 2019) and Maharashtra AAR (Habufa Meubelen B.V., 2018), consistently supports the exemption of liaison offices from GST registration where no taxable supply occurs. Businesses must carefully assess branch operations to ensure compliance while avoiding unnecessary registrations.

Scenario:-

The supplier is engaged in providing services in India through its Delhi Office which is registered under GST Act. Now, the supplier wants to open a new office in Noida i.e. Uttar Pradesh. However, the company will still provide the services from its registered office i.e. Delhi. The Noida Office will be work as support office i.e. Liaison Office and no taxable supply will take place from that office.

Query:  –

Is it mandatory to obtain registration under the GST Act for Noida Office?

Analysis: –

1. Meaning of Liaison Office & Key Characteristics of Liaison Office: –

A liaison office (LO) is an office set up by a company to coordinate activities between its head office and customers, suppliers, or other business stakeholders.

Characteristics: –

• It does not engage in commercial or business activities.
• It does not raise invoices or earn revenue.
• It is funded entirely by the head office (HO) and does not generate income in India.

2. Understanding GST registration requirement:-

Section 22 of CGST Act, 2017 – Mandatory Registration

• Every supplier shall be liable to be registered under this Act in the State or Union territory from where he makes a taxable supply of goods or services if his aggregate turnover exceeds the threshold limit.

Section 23(1) of CGST Act, 2017 – Persons not liable for registration: –

(a) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act;

Section 25(2) of the CGST Act, 2017 – Separate Registration for Different States: –

“A person seeking registration under this Act shall be granted a single registration in a State or Union territory: Provided that a person having multiple places of business in a State or Union territory may be granted a separate registration for each place of business…”

Rule 18 of the CGST Rules, 2017 – Display of GST Registration

“Every registered person shall display his Goods and Services Tax Registration Certificate in a prominent location at his principal place of business and at every additional place of business.“

Analysis: –

• On plain reading of the Section 22(1), it states that every supplier making taxable supplies of goods or services must obtain GST registration in the state from which such supplies are made, if the aggregate turnover exceeds the threshold limit (₹20 lakh for services, ₹40 lakh for goods in most states).
• Section 22 clearly states that requirement of GST registration is only when person is making taxable supply from its place of business exceeding the threshold limit as prescribed otherwise there is no requirement of GST registration.
• Further, Section 23 also states that the person is not required to be registered under GST if person is not liable to pay tax.
• As per Section 25 separate registration is NOT MANDATORY if a branch office is only a support office and is not supplying taxable goods or services.
• Instead, the company should update its Delhi GST registration by adding Noida as an “Additional Place of Business” under GST REG-14 and display the GST certificate at both Delhi and Noida offices.
• If the Noida office engages in providing services, it will be considered a place of business in Tamil Nadu and must obtain GST registration.
• However, if the Noida office is only a liaison office and not making any taxable supply, it does not require GST registration

Important Definitions:-

Section 2(85) – Place of Business

“place of business” includes-

(a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies or receives goods or services or both; or

(b) a place where a taxable person maintains his books of account; or

(c) a place where a taxable person is engaged in business through an agent, by whatever name called;

Section 2(108) – Taxable Supply

means a supply of goods or services or both which is leviable to tax under this Act.

Analysis: –

• If the Noida office is only acting as a liaison office (i.e., facilitating communication between the Delhi head office and clients/vendors), it may not qualify as a “place of business” under GST.
• If the Noida office does not supply any goods or services (i.e., does not generate revenue, issue invoices, or enter into service contracts), it is not making taxable supplies and thus not liable for GST registration.

3. Concept of Supply – Section 7(1)

“Supply” includes all forms of supply of goods or services for consideration in the course or furtherance of business.

Key Consideration:

• If the Noida office is not providing any services for consideration, there is no supply under GST.
• If there is no supply, GST registration is not required.

4. When Would GST Registration Be Required for the Noida Office?

i. If the Liaison Office Provides Services to HO – Schedule I of CGST Act

As per Para 2 of SCH I of CGST Act

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:

Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.

Analysis: –

• It states that supply of services between related persons or between distinct persons (having different GSTINs under the same PAN) without consideration is treated as “supply” under GST, if made in the course of business.
• If the Noida office charges the Delhi head office for internal support services (e.g., HR, administration, IT services), then it could be considered as a cross-charge and may be liable for GST registration.
• However, if all expenses of the Noida office (like rent, salaries, utilities) are reimbursed by Delhi HO without any markup, it does not qualify as a taxable supply under GST and GST registration is not required.

5. If the Noida Office Engages in Business Activities: –

If the Noida office starts:

• Providing freight & forwarding services locally,
• Raising invoices for services,
• Entering into contracts,

Then, it is considered a taxable supplier and must obtain GST registration in Tamil Nadu.

6. When GST Registration in Noida is NOT Required: –

A liaison office in Noida does not require GST registration if:

• It only facilitates communication between head office (Delhi) and customers/vendors.
• It does not provide services independently or generate revenue.
• It does not issue invoices or receive payments.
• All expenses (rent, salaries, etc.) are reimbursed by the Delhi head office without

7. Circulars & Clarifications on Liaison Offices & GST: –

• The Central Board of Indirect Taxes and Customs (CBIC), through multiple rulings and clarifications, has stated that a liaison office does not need GST registration if:
• It is not engaged in commercial activities or revenue generation.
• It does not issue invoices or receive consideration for services.
• Its expenses are entirely funded by the head office with no commercial transactions.

Advance Ruling

1. In the Case of Fraunhofer-Gesellschaft (2019)

The Authority for Advance Rulings (AAR) Karnataka ruled that:

• A liaison office is not required to obtain GST registration as it does not provide services in India.
• The HO funding to the liaison office is not a consideration under GST.

2. Karnataka AAR – Toshniwal Brothers (SR) Pvt. Ltd. (2020)

Facts:

• The company had multiple branch offices across different states.
• However, taxable services were provided only from one office.

Ruling:

• No separate GST registration was required in states where no taxable supplies were made.

Relevance to this case:

• Since Noida office is only a back-office setup and services are provided from Delhi, a separate registration is not required.

3. Maharashtra AAR – Habufa Meubelen B.V. (2018)

Facts:

• A foreign company had a liaison office in India that only coordinated with its headquarters.
• No taxable supplies were made from India.

Ruling:

• GST registration was not required since no taxable supplies were made from India.

Relevance to this case:

• If Noida office does not provide taxable services, GST registration is not required.

4. Profisolutions Pvt. Ltd. (Tamil Nadu AAR, 2023)

• Ruled that employee costs and shared services between branches are taxable supplies, requiring GST registration.

5. Caltech Polymers Pvt. Ltd. (Kerala AAR, 2018)

• Confirmed that expenses incurred by an administrative office for other branches may attract GST if cross-charged.

6. Conclusion – Is GST Registration Required for the Noida Liaison Office?

7. Conclusion

• If the administrative branch is a pure liaison office, with no commercial transactions, GST registration is not required.
• If the branch provides any service (even internal ones) that is cross-charged to other branches, GST registration is mandatory.
• Businesses must carefully evaluate their branch functions to determine whether GST registration is required to avoid compliance issues.