GST Open Issues.

  

1.       GST on the common cost of different branches/ units

·         Decision of AAAR is binding only to Columbia Asia.

·         Employee is an employee of a company and not any particular location of the company.

·         Schedule III of CGST Act 2017 exempt service of the employee  from GST

·         Hence there cannot be any logic to cross charge employee cost within the organization & charge GST on the same.

·         Supreme court also held that what cannot be done directly , cannot be done indirectly & hence cross charge between branches for common expenses  is not possible.

  

2.       GST on sales made by overseas branches. 

·         As per section 7(1)(b) the amount remitted to overseas branches is  to meet the expenses of the branches and not for any consideration of service & hence in the absence of any supply, there cannot be any GST.

 

3.       Reversal of GST input credit for having  income from investment.

·         Income from investment are not outside the scope of definition of supply

·         Hence it is  incorrect to considered the same as exempt supply.

·         Rule 42 & 43 come to play only when there is taxable & non taxable supplies.

·         Hence there cannot be any disallowance for input credit towards income from investment.  

 

4.       Reversal of GST input credit for having overseas branch operation.

·         Transaction between overseas branch & overseas customer is not supply  for India GST. (Refer Entry 7 of III schedule)

·         The same is outside the definition of supply and hence no reversal of input credit.

   

5.       GST on notice pay recovered from employees. 

·         Notice pay is an act agreed in advance and not an tolerance of an act or a situation.

·         Hence notice pay cannot be termed as supply  & no GST.