Financial assistance received in lieu of services to be provided by Indian subsidiary company to holding company in Germany is a supply of service

Last updated: 09 January 2021

Save Share

Quick Summary

The Maharashtra Authority for Advance Ruling (AAR) has determined that financial assistance received by an Indian subsidiary from its German holding company, in exchange for providing training services, constitutes a taxable supply of service. This financial aid is considered 'consideration' for the subsidiary's commitment to construct a training centre and conduct various training programmes for employees and students, as stipulated in a service contract. The ruling classifies these activities under 'Agreeing to do an Act' and confirms that the place of supply is India, thus not qualifying as an export of service.

Court :
AAR Maharashtra

Brief :
The Hon'ble AAR Maharashtra in M/s. Prettl Automotive India Private Limited [Order No. GST-ARA-20/2019-20/B-59 dated December 15, 2020] held that financial assistance to be received by the Indian subsidiary is a ' consideration' for supply and agreeing to do some acts under contract for the activity of imparting training to students, unskilled workers etc. by an Indian Subsidiary pursuant to financial-aid received under Germany's economic programme for developing countries is 'supply of service' classifiable under SAC Heading 999792 vide Notification-11/2017 - Central Tax (Rate) dated June 28, 2017 (" Services Rate Notification"), which pertains to " Agreeing to do an Act".

Citation :
Order No. GST-ARA-20/2019-20/B-59 dated December 15, 2020

Daily Limit Reached