By Dinesh Agrawal, Ankit A. Shah, Pranay Sahay

The Authority of Advance Ruling (AAR) in the state of Karnataka, in its order in Columbia Asia Hospitals Private Limited (the Applicant) dated 27 July 2018, made critical observations concerning the taxability of employee cost at a corporate office under Goods and Services Tax (GST).

Background
The Applicant runs a chain of modern hospitals across India. Accounting, administration and maintenance of IT system are centralised and managed by the corporate office. While the corporate office was recharging the cost of sourced inward supplies like rent on immovable property, consultancy services, communication services, etc. to each hospital on the basis their turnover, the employee cost was not recovered. The issue before the AAR was whether the cost incurred towards employees working at the corporate office was to be recharged and subjected to GST?