Karnataka GST Ruling 10/2018: H&M Auxiliary Services Case Withdrawn
The Karnataka GST Authority permitted H&M India to withdraw its advance ruling application without deciding if support services count as exports.
- Ruling
- KAR ADRG 10 / 2018 Dated : 29th June, 2018
- Dated
- 29 Jun 2018
- 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
- H&M asked if back-office services to its Hong Kong entity qualified as exports.
- The company voluntarily asked to withdraw its GST advance ruling application.
- The authority accepted the request without ruling on the tax merits.
- This order creates no rule on whether support services are GST exports.
In short
H&M India provides support services like supplier training, administrative support, and HR functions to its group entity in Hong Kong. The company approached the Karnataka tax authority to clarify if these services qualified as an export of services under GST, which would make them zero-rated and free from GST. However, before the authority could decide on the matter, H&M submitted a letter asking to withdraw their application.
What has changed
How it worked before
Businesses providing back-office, administrative, or HR support to overseas group companies often assumed these qualified as zero-rated exports under GST. However, tax officers frequently challenged this, treating such arrangements as intermediary services liable for full GST.
What has changed
Nothing changed regarding the tax rules. The authority simply dismissed the application as withdrawn based on the company's request under Order 10/2018. Because the authority did not issue a decision on the merits, this order leaves the tax status of cross-border support services unchanged.
Who this affects
Indian subsidiaries or businesses providing administrative, HR, or vendor support services to overseas parent or affiliate companies.
An example
An Indian consulting firm provides vendor management and HR support to an overseas affiliate in Singapore. The firm wants to know if these services qualify as zero-rated exports under GST so it does not have to charge tax. Looking at this order, the firm sees that H&M withdrew its request, so no legal answer was given. The firm cannot rely on this case to claim a tax exemption and must review its own agreement with a tax professional.
What you should do
Do not treat this order as a legal decision or tax exemption for your business. An advance ruling applies only to the specific business that asked, and in this case, no ruling was issued at all. You must evaluate your own contracts under GST law or file a fresh application for your own business.
If you do nothing
Assuming this document grants a tax exemption for overseas support services would be a mistake because no decision was made. If you treat your services as tax-free exports and a tax officer disagrees, you may face demands for unpaid GST. This can result in interest charges and penalties for failing to pay the correct tax.
The terms explained
- export of services
- Supplying a service from India to a foreign buyer where payment is received in convertible foreign currency, meeting specific tax conditions.
- zero rated supply
- A transaction on which no output GST is payable, while still allowing the business to claim refunds on the tax paid for business inputs.
- advance ruling
- A binding decision given by tax authorities to a specific business explaining how GST law applies to their proposed or current operations.
The ruling in detail
Authority for Advance Ruling
M/s H&M Hennes & Mauritz India Pvt. Ltd.
KAR ADRG 10 / 2018 Dated : 29th June, 2018 · Karnataka
Questions before the authority
- Whether the auxiliary services provided by H&M Hennes & Mauritz India Private Limited to Plus Trading Far East Limited, Hong Kong in terms of Auxiliary Services Agreement dated 19th January 2015 (effective from 01 February 2015) qualify as Export of Services under Section 2(6) of the Integrated Goods and Service Tax Act’ 2017 (‘IGST Act’) and hence be treated as zero rated supplies in terms of Section 16 of the IGST Act?
Facts
The Applicant is an Indian wholly-owned subsidiary of H&M Hennes & Mauritz AB, Sweden. It provides auxiliary support services primarily involving supplier training, HR, and administrative functions to an overseas group entity, Plus Trading Far East Ltd., Hong Kong. The Applicant approached the Authority to clarify whether such services qualify as an export of services.
Ruling
The Authority for Advance Ruling dismissed the application as **withdrawn**. The decision was based entirely on the Applicant's voluntary request to withdraw their application prior to the issue of a final ruling.
Reasoning
The Applicant submitted a letter dated 27.06.2018 expressing their intention to withdraw the Advance Ruling application and requesting permission for the same. The Authority considered the Applicant's request alongside the initial application and submissions made during the personal hearings. Consequently, without adjudicating on the substantive merits under Section 2(6) or Section 16 of the IGST Act, the Authority formally **dismissed the application as withdrawn**.
Provisions relied on
- Section 98(4) of the Central Goods and Services Tax Act, 2017
- Section 98(4) of the Karnataka Goods and Services Tax Act, 2017
- Section 97 of the Central Goods and Services Tax Act, 2017
- Section 2(6) of the Integrated Goods and Services Tax Act, 2017
- Section 16 of the Integrated Goods and Services Tax Act, 2017
For the practitioner
This order illustrates that advance ruling applications can be **withdrawn upon request** before a final determination is pronounced. It holds no precedent value on whether cross-border auxiliary support services constitute an export of services under GST.
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/krntk_10.18_dt_29.06.18_h_mipl.pdf
Legibility of the scan, as read: high.
Prepared 19-10-2026.
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