This circular provides clarity on how GST applies when one office of an organisation provides services to another office located in a different State, both treated as distinct persons under section 25. It explains that when the Head Office (HO) procures common input services for itself and its Branch Offices (BOs), it may distribute input tax credit either through the ISD mechanism or by issuing tax invoices directly to the BOs; ISD registration is required only if that route is chosen.

For internally generated services provided by HO to BOs, if the BO is eligible for full ITC, the value declared in the invoice is accepted as the open market value, even if certain cost components like employee salary are excluded. If no invoice is issued, the value may be treated as nil for GST purposes. Where full ITC is not available, salary cost still does not have to be mandatorily included in valuing such services.