The concept of ‘Fixed Establishment’ (FE) is essential for determining various requirements under the GST law including the registration requirement. The definition of FE given under the GST law is neither conclusive nor it has been explored before the Courts in India. The said definition is similar to that given under the EU VAT. Taxmann organized the first of its kind webinar where our Research & Advisory team discussed the concept of fixed establishment under the Indian GST alongside a renowned speaker from Spain Mr. Gallardo who discussed about the definition from EU VAT perspective. Let's hear and understand the concept of fixed establishment along with settled principles of EU VAT.

1. 1
Fixed Establishment under
Indian GST - Decoding with
EUVAT Jurisprudence
________________________________________________________________________________________________________
Taxmann | Research and Advisory (IndirectTax) Team
with Mr. Francisco Javier Sánchez Gallardo (from Spain)
June 2021

2. 2
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3. 3
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4. 4
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5. 5
PART I – INDIAN GST
• Meaning and Relevance of concept Fixed
Establishment (‘FE’) under Indian GST including
– Practical Issues relating to FE
– Interpretational Issues in the definition of FE
• Clarificatory points by CBIC
• Implications of non compliance with FE
requirements
• Relevant Advance Rulings
PART II – EUVAT
Table of Content

6. 6
Meaning & Relevance of concept
Fixed Establishment under Indian
GST
1.

7. 7
Background of Concept‘Fixed Establishment'
Spanish Company
(Zig S.A.) Madrid
Indian Company (A Ltd)
New Delhi
Supply of Capital Goods
followed by a Maintenance
Contract
(Contract requires availability of
resources at New Delhi for
providing services)
Indian Company (O Ltd)
New Delhi
Maintenance Contract
outsourced to an Indian
Company (O Ltd)
(Along with deputation
of its supervisors)
Maintenance Services on
behalf of Spanish Company
1
2
3
4

8. 8
Background of Concept‘Fixed Establishment'
A Ltd (New Delhi)
Whether A Ltd (Indian
Company) is liable to pay
IGST on maintenance
services under Reverse
Charge?
Zig S.A. (Madrid)
Whether Zig S.A. is liable to
take registration in India
and pay GST under forward
charge?
Type of Tax to be discharged?
(A) IGST – Under Import of Services by A Ltd
Or
(B) CGST & SGST – Under forward charge by Zig S.A.
(Intra State Supply)
O Ltd (New Delhi)
Whether Services of O Ltd
qualify as Export of
Services?

9. 9
Background of Concept‘Fixed Establishment'
Registration is required in a State from where supply is made
Registration under GST
Location of Supplier & Place of Supply
Same State = Intra-State Supply (Exigible to CGST & SGST)
Different State = Inter-State Supply (Exigible to IGST)
Type of Tax to be paid
- Location of supplier of services is outside India
- Location of recipient of services is in India
- Place of Supply of services is in India
Import of Services
- Location of supplier is in India
- Location of recipient is outside India
- Place of supply of transaction is outside India
- Realisation in convertible foreign currency ( except where permitted
by RBI)
- Parties must not be distinct persons as per IGST Act
Export of Services
1
2
3
4
What is
common in all?
Location
Where supply is
made/received
Cross
Border
Domestic
Supplies

10. 10
Background of Concept‘Fixed Establishment'
Place of business for which registration has been
obtained
Fixed establishment (other than above)
More than one establishment,
(whether the place of business or fixed establishment)
In absence of such places
Meaning of Location of Supplier/Recipient
Where supply is made/received from/at - Location of Supplier/ Recipient
Location of such Place of Business
1
Location of such Fixed Establishment
2
Location of the establishment most
directly concerned
3
Location of the usual place of
residence
4

11. 11
Background of Concept‘Fixed Establishment'
How to determine establishment most directly concerned?
[ServiceTax Education Guide - Dated June 20, 2012]
The contracts between the ‘service provider’ and ‘receiver’
Where there are no written contracts, any written account (documents, correspondence/e-mail etc.) between
parties which sets out in detail their understanding of the oral contract
Establishment from where services are actually provided (supplier), consumed/ effectively used/enjoyed (recipient)
Details of how the business fits into any larger corporate structure
The establishment whose staff is actually involved in the execution of the job
Performance agreements (which may indicative the substance and actual nature of work performed at a
particular establishment)

12. 12
Meaning of‘Fixed Establishment'
‘Fixed establishment’ means
a place (other than the registered place of business)
which is characterised by a sufficient degree of permanence and
suitable structure in terms of human and technical resources
to supply services, or to receive and use services for its own needs.

13. 13
Meaning of‘Fixed Establishment'
Place other than the
registered place of business
Place with sufficient degree
of permanence
Suitable structure in terms
of human and technical
resources
Registered place of business cannot be referred as Fixed Establishment
 Where registration is taken for a place of business, such scenario is covered under first limb /third limb, as case
may be of definition of location of supplier of services
Where Indian branch of a Foreign company is registered under GST, it cannot be termed a fixed establishment
Iz Kartex, In re [2020] 121 taxmann.com 313 (AAAR-West Bengal)

14. 14
Meaning of‘Fixed Establishment'
Place other than the
registered place of business
Suitable structure in terms
of human and technical
resources
Place with sufficient degree
of permanence
Sufficient degree of permanence is required (not permanency)
Term Sufficient and Permanence is neither defined under GST Laws, nor clarified by the CBIC
Sufficiency is required to be checked on the facts of each case
(a) MARC Contract - Deputation of employees, etc. at a particular place for the entire contract
tenure?
(b) Works Contract - Execution of Civil Contract in other State without permanence?
(c) Event Company - Execution of Event in other states
(d) Project office of foreign company in India

15. 15
Meaning of‘Fixed Establishment'
Place must have suitable structure in the form of –
- Human Resources
- Technical Resources
Place other than the
registered place of business
Suitable structure in terms
of human and technical
resources
Place with sufficient degree
of permanence
The number of staff at the location is not important
What is relevant is the adequacy of the arrangement (of human and technical resources), to carry out an activity for a
consideration, or to receive and use a service supplied

16. 16
Meaning of‘Fixed Establishment'
Human and Technical Resources (Practical Issues)
(a) HMS Services – Employees Deputed at Hotel – No Adequacy of arrangement in order to provide services
(b) Liaison office – No Human & Technical Resources in India
(c) Project office – Services are provided from PO, thus, condition gets satisfied
(d) Treatment of outsourced contracts ?
(e) Treatment where client’s technical resources are used for providing services (say, consulting engineering
including training services)
(f) Renting of Immovable Properties Located in other States, etc. – Location of immovable property would not
qualify as FE, if Immovable property is managed from other place (say HO)
Place other than the
registered place of business
Suitable structure in terms
of human and technical
resources
Place with sufficient degree
of permanence

17. 17
Clarificatory points
by CBIC
2.

18. 18
Clarificatory points by CBIC
The arrangement must be capable of executing the task
Temporary presence of staff by way of a short visit at a place cannot be called a fixed establishment
An overseas business house sets up offices with staff in India to provide services to Indian customers will be
considered as fixed establishment in India
A company with a business establishment abroad buys a property in India which it leases to a tenant. The property by
itself does not create a fixed establishment
However, if the company sets up office in India to carry on its business by managing the property, this will create a
fixed establishment in India
[ServiceTax Education Guide Dated June 20, 2012]

19. 19
Implications of non compliance with
Fixed Establishment requirements
3.

20. 20
Implications of non compliance with FE requirements
Implications in the hands of Supplier
 No Registration at FE – Department may demand tax under correct head in FE’s State. Tax paid earlier (if any) in other
registrations can be adjusted/claimed as refund
 In our view, Section 77 of the CGST Act, 2017 or Section 19 of the IGST Act, 2017 would not be applicable
(Department would not give you the benefit of interest waiver)
Implications in the hands of Recipient
 Tax payment under wrong registration by supplier (IGST instead of CGST/SGST or vice versa) - Recipient’s eligibility to claim
ITC?
Department may dispute ITC. Risk of denial is very law as determination of the tax liability is the responsibility of the supplier and
recipient cannot be held liable for payment
 ITC claimed at wrong location – Department may raise question on the eligibility to claim ITC
 IGST under reverse charge, where supplier has a FE in India – ITC may be denied by department arguing it Deposit and not tax

21. 21
Relevant Advance Rulings
4.

22. 22
 Maintenance Services
 Where supplier under repair and maintenance services ensures supervision of the equipment, supply of spares and consumable and
overheads for 5000 working hours for seventeen years, then it indicates sufficient degree of permanence of the human
and technical resources employed at site
 Suitable structure in terms of human and technical resources maintained at the premises of the recipient. Thus, the place would
not qualify as ‘fixed establishment’ (In our view, the ruling does not provide any reasoning that why FE cannot be at the client’s
place)
Iz Kartex, In re [2020] 117 taxmann.com 418 (AAR-West Bengal), Iz Kartex, In re [2020] 121 taxmann.com 313 (AAAR-West Bengal)
 Catering Services at client’s premises
 Catering services provided from the kitchen located at the client’s premises where a range of activities such as
- procurement of raw materials/ingredients,
- storage of goods,
- preparation of food as per requirement and agreed methodology, serving of food, etc.
are carried out along with the adequate manpower stationed at such kitchen would qualify as FE
Elior India Catering LLP, In re [2019] 110 taxmann.com 187 (AAR-Karnataka)
RelevantAdvance Rulings

23. 23
 Cross Border Consultancy Services
 Japan based company providing consultancy services through its substation experts/engineers
 Does not hold any office in India. However, office provided by recipient to consultant
 Held that expert belonging maintains suitable structures in terms of human and technical resources at the sites of recipient
Tokyo Electric Power Company Service Limited [2021] 124 taxmann.com 41 (AAR - Odisha)
 Works Contract Services
 Where performance of works contract services, involving supply of material and installation, testing and commissioning, etc., is in
another State, then the works contractor need not require to obtain a separate registration in that State
T & D Electricals, In re [2020] 116 taxmann.com 390 (AAR - Karnataka)
Jaimin Engineering (P.) Ltd., In re [2018] 97 taxmann.com 195 (AAR- Rajasthan)
RelevantAdvance Rulings

24. 1
VAT and Fixed Establishment,
the European Union
Approach
________________________________________________________________________________________________________
Francisco Javier Sánchez Gallardo (from Spain)
June 29, 2021

25. 2
PART II – EUVAT
• Some Previous Remarks
• Consequences of the Existence of Fixed
Establishments
• Definition of Fixed Establishments in the EU
Provisions
• ECJ Case Laws on Fixed Establishments
• Some specific cases
Table of Content

26. 3
Some Previous Remarks
1.

27. 4
Some Previous Remarks
In the EU, VAT, like any other tax, is regulated by national laws.
VAT is a harmonized tax in the European Union, with very detailed
European provisions. The relevance of the above is diverse:
• EU Law prevails over national provisions (as long as it is favorable for the
taxpayer).
Cases of non-compliance may have retroactive effect.
The procedures for its demand are national.
• Whenever possible, the internal regulations must be interpreted in the
light of the European one.
• The main standard for harmonizing VAT in the EU is Directive
2006/112/EC. Additionally, Implementing Regulation EU/0282/11 must be
taken into account
• European VAT jurisprudence is very copious

28. 5
Consequences of the existence of
Fixed Establishments
2.

29. 6
Consequences of the existence of Fixed Establishments
• Consequences of the existence of a fixed establishment:
 Place of supply of transactions (provision of services). The general rule is that any
service is located in the country in which the customer is established:
− There are special rules,
− For the delivery of goods, the place of delivery is followed.
 Charging VAT or not: the foreign taxable person who has a fixed establishment is
obliged to register, to pass on VAT to his client and to pay it to the tax authorities.
If there is no fixed establishment or, if there is, but does not intervene in the operations, there is no
obligation to charge and pay VAT and the reverse charge mechanism applies
 The refund procedure of input VAT depends on whether there is a fixed
establishment or not.

30. 7
Definition of Fixed Establishments in
the EU provisions
3.

31. 8
Definition of Fixed Establishments in the EU provisions
• Business place (art. 10 of Implementing Regulation EU/282/11): the place
where the functions of the business’s central administration are carried out.
 Account shall be taken of the place where essential decisions concerning the general
management of the business (with preference) are taken, the place where the registered
office of the business is located and the place where management meets.
 The mere presence of a postal address may not be taken to be the business place
(judgment 6-28-2007, Planzer Luxembourg, C-73/06, false place).

32. 9
Definition of Fixed Establishments in the EU provisions
• Fixed establishment (art. 11 of Implementing Regulation EU/282/11):
 Any establishment, other than the place of establishment of a business referred to in Article
10 of this Regulation, characterized by a sufficient degree of permanence and a suitable
structure in terms of human and technical resources to enable it to receive and use or to
provide the concerned supplied to it for its own needs.
 The fact of having a VAT identification number shall not in itself be sufficient to consider
that a taxable person has a fixed establishment.

33. 10
Definition of Fixed Establishments in the EU provisions
• Requirements for the existence of a fixed establishment in VAT:
 Objective:
− minimum consistency and
− permanence of available resources
 Subjective:
− existence of material and human means of production,
− availability of means,
− autonomy of operation
 Functional:
− ability to provide or receive the corresponding services in each case

34. 11
ECJ Case Laws on Fixed
Establishments
4.

35. 12
• An installation for carrying on a commercial activity (the operation of gaming machines), on board a ship sailing on
the high seas outside the national territory may be regarded as a fixed establishment only if the establishment
entails the permanent presence of both the human and technical resources necessary for the provision of those
services.
• In general, the place where the activity site is located is the main connection point for the provision of services. The
use of other connection points is only relevant when the previous criterion does not lead to an appropriate result.
Judgment of 4-7-1985, Berkholz, C-168/84 [2012] 22 taxmann.com 180 (ECJ)
ECJ Case Laws on Fixed Establishments
• The place where the seat of economic activity of the person who provides the service is located is a priority
reference point, in the sense that the consideration of another establishment from which the provision of services is
made only offers interest in case that attending to such seat of activity does not lead to a reasonable solution from a
tax point of view or creates a conflict with another Member State.
Judgment of 2-5-1996, Faaborg-Gelting Linien, C-231/94 [2012] 22 taxmann.com 177 (ECJ)

36. 13
• A wholly-owned subsidiary company that has relationships with the parent company that go beyond those derived
from participation in the share capital may constitute a fixed establishment of the parent company.
• In this case, the services rendered through this subsidiary can be attributed to said subsidiary.
Judgment of 20-2-1997, DFDS, C-260/95 [2012] 24 taxmann.com6 (ECJ)
ECJ Case Laws on Fixed Establishments
• A leasing company established in one Member State does not supply services from a fixed establishment in another
Member State if it makes passenger cars available in the second State under leasing agreements to customers
established there, if its customers have entered into contact with it through self-employed intermediaries
established in the second State, if they have chosen their cars from dealers established in the second State, if the
leasing company has acquired the cars in the second State, in which they are registered, and has made them
available to its customers under leasing agreements drawn up and signed at its main place of business, and if the
customers bear maintenance costs and pay road tax in the second State, but the leasing company does not have an
office or any premises on which to store the cars there.
Judgment of 17-7-1997, ARO Lease, C-190/95[2012] 22 taxmann.com 193 (ECJ)

37. 14
• It cannot be considered that a company that, from its Member State of establishment, makes leasing agreements for
vehicles to companies of another Member State, has, for this reason, a fixed establishment in the latter.
Judgment of 7-5-1998, Lease Plan Luxembourg, [2012] 22 taxmann.com 213 (ECJ)
• Regarding VAT refunds through the specific procedure for non-established entities, companies that have fixed
establishments in the Member State of refund, but do not carry out operations from them, should be considered as
non-established. This interpretation is not invalidated by the fact that the taxpayer has, in the Member State of
refund, a wholly owned subsidiary, whose object is almost exclusively to provide different services relating to the
conduct of tests.
Judgment of 25-10-2012, Daimler and Widex C-318/11 and C-319/11
ECJ Case Laws on Fixed Establishments

38. 15
• For the purposes of the application of the general place of supply rule for supplies between taxable persons, as a
criterion of priority it is necessary to attend to the Member State where the business place is located. The allocation
of the provision of services to other establishments is only appropriate when the previous criterion leads to a non-
rational situation or conflict with another Member State.
Judgment of 16-10-2014, Welmory, C-605/12
• In order to conclude that a licensing agreement making available the know-how enabling operation of a website by
which interactive audiovisual services were supplied, concluded with a company established in a Member State other
than that in which the company granting the license is established, arose from an abuse of rights designed to benefit
from the fact that the rate of value added tax applicable to those services was lower in that other Member State, the
fact that the manager and sole shareholder of the latter company was the creator of that know-how, that that same
person exercised influence or control over the development and exploitation of that know-how and over the supply
of the services which were based on it and that management of the financial transactions, staff and technical
instruments necessary for the supply of those services was carried out by subcontractors, and the reasons which may
have led the company granting the licence to make the know-how at issue available to a company established in that
other Member State instead of exploiting it itself, do not appear decisive in themselves.
Judgment of 17-12-2015, WebMindLicenses, C-419/14
ECJ Case Laws on Fixed Establishments

39. 16
• It is incumbent upon the referring court to analyse all the circumstances in order to determine whether that
agreement constituted a wholly artificial arrangement concealing the fact that the services at issue were not actually
supplied by the company acquiring the license, but by the company granting it, examining in particular whether the
establishment of the place of business or fixed establishment of the licensee was not genuine, whether that
company did not possess an appropriate structure in terms of premises and human and technical resources and
whether it did not engage in that economic activity in its own name and on its own behalf, at its own risk.
Judgment of 17-12-2015, WebMindLicenses, C-419/14
• The existence, in the territory of a Member State, of a fixed establishment of a company established in a non-
Member State may not be inferred by a supplier of services from the mere fact that that company has a subsidiary
there, and that supplier is not required to inquire, for the purposes of such an assessment, into contractual
relationships between the two entities.
Judgment of 7-5-2020, Dong Yang Electronics, C-547/18
ECJ Case Laws on Fixed Establishments

40. 17
• A property which is let in a Member State, in the circumstance where the owner of that property does not have his
or her own staff to perform services relating to the letting does not constitute a fixed establishment for VAT
purposes.
Judgment of 3-6-2021, Titanium, C-931/19
ECJ Case Laws on Fixed Establishments

41. 18
Some Specific Cases
5.

42. 19
• Agents or representations authorized to engage in the name and on behalf of the taxpayer.
Important: dependence on the foreign entity, otherwise, it does not make sense to
consider that there is a fixed establishment (ECJ judgment of 20-2-1997, C-260/95, DFDS).
• Construction, installation or assembly works, generally by reference to a minimum
duration (twelve months in Spain). Elements to be taken into account:
 start and end of the works,
 preparatory works,
 individual or separate calculation of the works.
Some Specific Cases

43. 20
• Facilities operated on a permanent basis by a taxable person for the storage and subsequent delivery of
goods.
• Real estate properties exploited under lease or by any title (judgment of 3-6-2021, Titanium, C-931/19).
Some Specific Cases

44. 21
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