The Government of Tripura has published the CBIC clarification dated the 17th July, 2023 regarding taxability of services provided by an office of an organization in one State to the office of that organization in another State, both being distinct persons.
It is clarified that in respect of common input services procured by the Head Office(HO) from a third party but attributable to both HO and Branch Office(BO) or exclusively to one or more BOs, HO has an option to distribute ITC in respect of such common input services by following ISD mechanism.
However, as per the present provisions of the CGST Act and CGST Rules, it is not mandatory for the HO to distribute such input tax credit by ISD mechanism. HO can also issue tax invoices to the concerned BOs in respect of common input services procured from a third party by HO but attributable to the said BOs and the BOs can then avail ITC on the same.
In case, the HO distributes or wishes to distribute ITC to BOs in respect of such common input services through the ISD mechanism, HO is required to get itself registered mandatorily as an ISD.
Further, such distribution of the ITC in respect a common input services procured from a third party can be made by the HO to a BO through ISD mechanism only if the said input services are attributable to the said BO or have actually been provided to the said BO. Similarly, the HO can issue tax invoices in respect of any input services, procured by HO from a third party for on or behalf of a BO, only if the said services have actually been provided to the concerned BOs.