Case Law Details
In re Cummins India Limited (GST AAAR Maharashtra)
Salary cost to be included in valuation for cross charge for supply of services between head office and branch office or vice versa
The AAAR, Maharashtra in the matter of M/S. Cummins India Limited [Advance Ruling No. MAH/AAAR/AM-RM/01/2021-22 dated December 21, 2021] held that head office using all its human resources to facilitate the operational requirements of the branch offices/units by way of procuring common input services on behalf of the branch offices/units thereby, providing the services, therefore, allocation and recovery of any amount including its employees salary cost from the branch offices/units will be subject to GST. Hence, the allocation and recovery of the salary of the employees of the head office from the branch office/units will be subject to GST.
Facts:
M/s. Cummins India Limited (“the Appellant”) is engaged in manufacture and sale of a variety of diesel engines, parts thereof, and related services, and undertake all day-to-day activities required therefore. The branch office/units as well as the head office of the Appellant, receives certain common input supplies on behalf of multiple/all of its units registered distinctly under GST and are procured on payment of GST and credit thereof is availed by receiving unit/head office. The Appellant sought the advance ruling on the issues w.r.t. classification of engine manufactured by the Appellant and Levy of GST on facilitation of common input services, necessity of registering as an ‘Input Service Distributor’ (“ISD”) and determination of assessable value.
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