Question

W (India)( P) LTD is a company having its Head Office at Delhi (Registered Person) and three branches at Bangalore, Chennai and Mumbai. All billing to outside customers are raised from Head Office and all the three branches are not raising any bill to any outside customers. The three branches are only giving support to Head Office at Delhi. In other words, invoicing and accounting function are centralised at Head office only. The Head Office is directly taking care of Expenses like Salary, Rent, Telephone and other Office expenses of all the three branches and TDS Liability, if any of any branches is also taken care of by the Head Office. In the service tax regime, the company was having centralised registration. GST Query: Whether the three branches and Head office (as Input Service Distributor) are mandatorily required to get GST Registration in respective States. What are the other implication and compliance relating to this.

Answer

Head Office is raising invoice to the customer for services like IT etc. This IT work is done at the branches located in Bangalore, Chennai and Mumbai.

This is not a case of ISD. In case of ISD one unit takes input services for various units like if the Advertisement Campaign for Rs 1 crore is done by Head office for the product manufactured at Bangalore, Chennai and Mumbai, then the credit of this advertisement will be distributed among all the 3 branches on the basis of their turnover.

The Head office and the branches are distinct persons as per definition given in section 25 of CGST Act:
Where a person who has obtained or is required to obtain registration in a State or Union territory in respect of an establishment, has an establishment in another State or Union territory, then such establishments shall be treated as establishments of distinct persons for the purposes of this Act.
The branches should raise invoice to the Head office and Head office should raise invoice to the customer. After taking ITC on the input services received from all branches, the Head office will pay balance of tax liability.

All the branches including Head office are to get registered separately as supplier. (Reply dt. 21.06.2018)