Reimbursement of costs made by the HO to contact office can't be treated as a thought: AAR

  • GST
  • Case Law
  • High Court

Fact of the Case

  • The applicant was having no other source of income and solely dependent on the head office (HO).It received reimbursement of all the expenses incurred from HO. It filed an application for an advance ruling to determine the taxability of reimbursement received.
  • It submitted that it would be acting as communication channel between the HO located outside India and Indian companies.Except for the liaison work, it would not undertake any business of trade, commercial or industrial nature. 
  • Moreover, no commission/fees would be charged, or any other remuneration received/income earned by the office in India for the liaison activities/services rendered by it or otherwise in India.


  • The Authority for Advance Ruling noted that except liaison work, the applicant would not engage in trade, commercial or industrial nature.
  • The applicant would not have any other source of income and it would be solely dependent on the HO for all the expenses incurred, which would be subsequently reimbursed by the HO.
  • Hence, the HO and Liaison Office cannot be treated as separate persons. Furthermore, there cannot be any flow of services and the reimbursement of costs cannot be treated as a consideration. Thus, reimbursement would fall outside the scope of supply.