2021 (12) TMI 774 - AAR - GST

Levy of GST - supply or not - part recovery of 'renting of motor vehicles services'/'cab services' from employees in respect of the transport facility provided to them - valuation of supply keeping in mind that employee and the applicant are related party as per provisions of GST law - admissibility of ITC in respect of GST paid on inward supply of 'renting of motor vehicles service' which are used for the employee - HELD THAT - GST is discharged on the gross value of bills raised on the applicant by the third party vendors. We also observe that the partial amounts recovered by the applicant from its employees in respect of use of such transport facility are a part of the amount paid to the third party vendors which has already suffered GST. Therefore, in the subject case, the applicant is not providing transportation facility to its employees, in fact the applicant is a receiver of such services. For applicant, arranging the transport facility for their employees is definitely not an activity which is incidental or ancillary to the activity of software development, nor can it be called an activity done in the course of or in furtherance of development of software as it is not integrally connected to the business in such a way that without this the business will not function. As arranging transport facility to its employee is not a supply of service, accordingly the remaining questions become redundant and merit no discussion - application disposed off.

Issues Involved:
1. Whether part recovery of 'renting of motor vehicles services'/'cab services' from employees for the transport facility provided to them would be treated as 'supply' under GST and whether GST is leviable on the same.
2. If yes, how the value of said supply will be determined considering the employee and the applicant are related parties under GST law.
3. If yes, whether Input Tax Credit (ITC) is admissible for GST paid on inward supply of 'renting of motor vehicles service' used for employees.

Issue-Wise Detailed Analysis:

Issue 1: Whether part recovery of 'renting of motor vehicles services'/'cab services' from employees for the transport facility provided to them would be treated as 'supply' under GST and whether GST is leviable on the same.

The applicant, Integrated Decisions and Systems India Pvt Ltd., provides transportation facilities to its employees as a welfare measure and recovers a partial amount from them. The applicant argues that this partial recovery is not a 'supply' as per GST provisions since it is not in furtherance of business and is merely a reimbursement of expenses. They cite Section 7 of the CGST Act, which defines 'supply' and argue that the transaction does not meet the criteria of being in furtherance of business. The applicant references similar rulings, such as Posco India Pune Processing Center (P.) Ltd., where it was held that providing health insurance to employees was not a supply of services.

The jurisdictional officer, however, contends that the activity meets the conditions of 'supply' under Section 7 of the CGST Act, as it involves two persons, is made for consideration, and is in furtherance of business. They argue that providing transport facilities is incidental or ancillary to the applicant's main business of software development.

The Authority examined the facts and concluded that the provision of transport facilities is a welfare measure and not in furtherance of business. They noted that the applicant is not in the business of providing transport services and that the transport service is provided by third-party vendors. The GST is already discharged on the full value of bills raised by these vendors. Therefore, the partial recovery from employees does not constitute a 'supply' by the applicant to its employees.

Conclusion for Issue 1:
The partial recovery of 'renting of motor vehicles services'/'cab services' from employees is not treated as 'supply' under GST, and GST is not leviable on the same.

Issue 2: If yes, how the value of said supply will be determined considering the employee and the applicant are related parties under GST law.

Since the answer to Issue 1 is negative, this question becomes redundant. The valuation of the supply does not need to be determined.

Conclusion for Issue 2:
Not applicable as the partial recovery is not considered a supply.

Issue 3: If yes, whether Input Tax Credit (ITC) is admissible for GST paid on inward supply of 'renting of motor vehicles service' used for employees.

Similarly, since the answer to Issue 1 is negative, this question also becomes redundant. The admissibility of ITC does not need to be addressed.

Conclusion for Issue 3:
Not applicable as the partial recovery is not considered a supply.

Order:

Question 1: Whether part recovery of 'renting of motor vehicles services'/'cab services' from employees for the transport facility provided to them would be treated as 'supply' under GST and whether GST is leviable on the same?
Answer: Answered in the negative.

Question 2: If answer to question no. 1 is yes, then how the value of said supply will be determined keeping in mind that employee and the applicant are related parties under GST law?
Answer: Not answered in view of the answer to Question No. 1.

Question 3: Further also if the answer to question no 1 is yes, then whether Input Tax Credit is admissible for GST paid on inward supply of 'renting of motor vehicles service' used for employees?
Answer: Not answered in view of the answer to Question No. 1.

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