Liaison Office services are liable to GST in India. RBI restriction on carrying on business by LO cannot decide the scope of business for the purposes of GST. LO qualifies as carrying out business activity in India.
LO and HO are separate person for the purposes of GST. Services provided by LO are inter-state supply liable to GST.
With respect to exemption on services provided by an establishment to its another establishment outside India, it is held that such exemption is available only in case ‘POS’ of the services by establishment in India is outside India. In the case at hand, LO is facilitating supply between the HO and Indian customers. They have a mandate from RBI for this purpose. Further, they are not making any supply on their own, which anyway is a restriction placed upon them by RBI.
Such an observation by Karnataka AAR may lead to LO activities being made liable to GST even in presence of the abovesaid exemption.