Expats deputed in India for project execution are employees of Project office & hence No GST on their salaries

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[2020] 117 taxmann.com 537 (AAR – MAHARASHTRA)


Hitachi Power Europe GmbH, In re


NO. GST-ARA-38/2019-20/B-27

MARCH  11, 2020 

Section 8 of the Central Goods and Services Tax Act, 2017/section 8 of the Maharashtra Goods and Services Tax Act, 2017 – Composite and mixed supplies, tax liability on – HP GmbH is a company incorporated in Germany – It has been awarded a contract for supply of goods and supervisory services in relation to projects of NTPC – In order to execute said contracts, German company opens a project office in India i.e. applicant herein – Few employees of Head Office (expat employees) work in project office in India – Since most of those expat employees have their primary bank accounts in Germany, salary is paid to said employees from HO’s bank account located abroad for administrative convenience – However, in order to keep record of salary expenses of expat employees, project office makes an accounting entry in its financial books of accounts in India even though salary is paid by Head Office – Whether project office is an extension of Head Office and, thus, there is a relation of employer and employee between project office and expat employees – Held, yes – Whether, in such a case, Schedule III of Act comes into play as per which services by an employee to employer in course of or in relation to his employment will not be considered as a supply and therefore will not attract GST – Held, yes – Whether in view of aforesaid, it has to be ruled that GST is not applicable on accounting entry made for purpose of Indian accounting requirements in books of accounts of project office for salary cost of expat employees – Held, yes [Paras 5.7,5.9 and 6]

Download the ruling here.



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