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Taxation Central Ministry of Finance Central Goods and Services Tax Act, 2017

Clarification regarding taxability of services provided by an office of an organisation in one State to the office of that organisation in another State

17-Jul-2023 | Circular No. 199/11/2023-GST

CBIC has issued a circular regarding the clarification of the taxability of services provided by an office of an organization in one State to the office of that organization in another State, both being distinct persons.

By virtue of this circular, the following points have been clarified:
1. It is clarified that in respect of common input services procured by the HO from a third party but attributable to both HO and BOs or exclusively to one or more BOs, HO has an option to distribute ITC in respect of such common input services by following ISD mechanism laid down in Section 20 of CGST Act read with rule 39 of the Central Goods and Services Tax Rules, 2017.
2. The value of the supply of goods or services or both between distinct persons shall be the open market value of such supply. The second proviso to rule 28 of CGST Rules provides that where the recipient is eligible for full input tax credit, the value declared in the invoice shall be deemed to be the open market value of the goods or services. Accordingly, in respect of the supply of services by HO to BOs, the value of the said supply of services declared in the invoice by HO shall be deemed to be the open market value of such services, if the recipient BO is eligible for full input tax credit, etc.

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