A recent ruling by the Odisha Appellate Authority for Advance Ruling (AAAR) in the case of Thermo Fisher Scientific India Pvt. Ltd. provides significant relief and clarity for businesses operating across state lines through service engineers without a physical office.
The AAAR has overturned a previous ruling, confirming that deploying Field Service Engineers (FSEs) to a state does not automatically mandate a separate GST registration in that state.
The Core Conflict
The lower authority (AAR) originally held that because the company had engineers residing in Odisha who stored minor spare parts and tools locally, they had a “Fixed Establishment” and a “Place of Business,” requiring GST registration. The AAAR has now set aside this decision.
Key Takeaways from the AAAR Ruling
The AAAR’s decision was based on several critical factors that define what does—and does not—constitute a business presence:
• No “Fixed Establishment” (FE): To be an FE, there must be a degree of permanence and a suitable structure (human and technical resources). The AAAR noted that temporary storage of toolkits and leftover spares by engineers does not meet the “permanence” test.
• Centralized Control: All contracts, invoicing, and receipt of payments were managed by the Maharashtra Head Office (HO). The Odisha presence was purely for execution, not administration.
• Employees are not “Agents”: The revenue department argued FSEs were “agents.” The AAAR clarified that FSEs are employees acting under HO supervision. They cannot independently sign contracts or provide services if the HO terminates the client agreement.
• Minimal Inventory: Since the principal inventory was stored and managed at the HO, the mere presence of “leftover” parts at an engineer’s location did not constitute a warehouse or place of business.
The Verdict: No separate GST registration is required in a state if the activity is limited to service execution by employees directed by a central Head Office.
