Tamil Nadu GST Advance Ruling TN/26/AAR/2023: Application Withdrawn
The Authority for Advance Ruling closed this case without a decision because the business withdrew its request.
- Ruling
- Advance Ruling No. 26/AAR/2023, Dated: 24.08.2023
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Foster Wheeler (G.B.) Ltd. asked about tax on shared legal costs.
- The company requested to withdraw their application before a decision.
- The Authority closed the case without ruling on the tax issue.
In short
The company asked the Authority for Advance Ruling (AAR) in Tamil Nadu whether sharing legal costs with their Indian office counts as a taxable supply under Goods and Services Tax (GST). They also asked if they needed to pay tax under the Reverse Charge Mechanism (RCM).
What has changed
How it worked before
Businesses often look to advance rulings to understand if cost-sharing between a foreign head office and an Indian project office is taxable.
What has changed
Nothing changed because the authority did not issue a decision. The case was closed purely for procedural reasons, meaning there is no new guidance on how to treat these shared costs.
Who this affects
Project offices or Indian branches of foreign companies that share expenses with their head office.
An example
Imagine a software company in Bangalore that shares legal fees with its parent company in the UK. They might hope this ruling tells them if they owe GST on those shared costs. Since this ruling was withdrawn, it offers no help, and the company must still determine its tax liability based on current GST laws.
What you should do
Do not use this ruling to support any tax position. Because the authority did not decide the merits of the case, this document provides no legal guidance for your business. You must consult your own tax advisor to determine how to handle cost-sharing arrangements.
If you do nothing
If you assume this ruling sets a precedent, you risk miscalculating your tax liability. A tax officer is not bound by a withdrawn application and may still demand tax, interest, and penalties if they disagree with your interpretation of the law.
The terms explained
- Advance Ruling
- A written decision from tax authorities that clarifies how GST laws apply to a specific business transaction.
- Reverse Charge Mechanism
- A system where the person receiving a service pays the tax directly to the government instead of the person providing the service.
- Supply
- Any form of sale, transfer, or exchange of goods or services made for a price that triggers a tax liability.
The ruling in detail
Authority for Advance Ruling
Foster Wheeler (G.B.) Limited, Project Office
Advance Ruling No. 26/AAR/2023, Dated: 24.08.2023 · Tamil Nadu
Questions before the authority
- Whether the legal cost apportionment by FWEL to the Applicant amounts to the supply under GST?
- If so, whether the Applicant is required to pay tax under Reverse Charge Mechanism (RCM)?
Facts
The applicant is a Project Office in India established by Foster Wheeler (G.B.) Limited (FWEL) to execute consultancy services for a project. Following arbitration proceedings with a client, FWEL incurred legal expenses and subsequently recharged these costs to the applicant on a cost-to-cost basis without any mark-up. The applicant sought a ruling on whether this cost apportionment constitutes a taxable supply under GST and if it attracts RCM.
Ruling
The authority did not address the merits of the questions raised. The applicant requested to withdraw their application for an advance ruling, and the authority disposed of the application as withdrawn.
Reasoning
The applicant submitted a request to withdraw their application via email dated 26.07.2023. Consequently, the Authority for Advance Ruling treated the application as withdrawn without examining the merits or detailed facts of the case. No specific provisions were interpreted as the ruling was purely procedural.
For the practitioner
This order provides no guidance on the taxability of cost apportionment or the applicability of RCM in this context. It serves only as a record of the applicant's decision to withdraw their request for an advance ruling. Practitioners cannot rely on this document for any legal precedent regarding the subject matter.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/26_foster_wheeler.pdf
Legibility of the scan, as read: high.
Prepared 16-10-2026.
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