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2019 (10) TMI 797 - AAR - GSTValuation - service of transportation to the employees of the tenants of the business park - inclusion of value of bus passes distributed by the applicant to the Commuters in the value of facilitation charges - section 15(2) of the CGST Act, 2017 and KGST Act, 2017 - supply service in the hands of the applicant could be classified as merely a supply of facilitation services between and the commuters. HELD THAT - The service is that of services of a chartered bus and the consideration is charged by the BMTC in the form of bus passes. The value of 50 passes is the consideration for the provision of service provided by the BMTC. Regarding the recipient of service, it is seen that the consideration for this Service is payable by the applicant and clause (93) of section 2 of the CGST Act, makes it amply clear that the person who is liable to pay the consideration is the recipient of service -and in this case, the applicant is liable to pay the consideration and hence would be the recipient of service under the GST Act. The services provided by BMTC to the applicant are covered under SAC 996413 - Non Scheduled Local Bus and Coach Charter Services. The Services are provided by the BMTC to the applicant and the applicant collects the consideration of the bus passes plus the service charges and provides the same services. Coming to the services provided by the applicant to the actual passengers, the applicant is providing transportation services and the applicant is required to arrange alternate services to the commuters in Case BMTC ceases to provide the transport services wholly or in part - Further, the bills issued by the applicant are verified and found that the bills are issued to the Companies in the ITPB and not to the individual commuters. The applicant is valuing the service only to the extent of the additional amount charged as facilitation charges and collecting the balance amount as monthly pass amount and paying the taxes only to the extent of facilitation charges. The Commuters. or the Companies are not party to the contract between the applicant and BMTC and the applicant is providing the services after obtaining the same from BMTC. The contention of the applicant that he is an intermediary is incorrect in that the applicant is receiving the services provided by BMTC for the aforesaid reasons and the applicant is providing the services to his clients. Value of services - HELD THAT - The total amount charged to the service recipient by the applicant would be the value of services supplied as per Section 15 of the CGST Act, 2017. Hence the value of the monthly passes issued plus the facilitation charges charged by the applicant and such other amounts which form the part of the Value of supply as specified in Section 15 Would be the Value of supply of the services provided by the applicant to the commuters.
Issues Involved:
1. Inclusion of the value of bus passes in facilitation charges under Section 15(2) of the CGST Act, 2017 and KGST Act, 2017. 2. Classification of the applicant's service as merely facilitation services between BMTC and commuters. Detailed Analysis: Issue 1: Inclusion of the Value of Bus Passes in Facilitation Charges The applicant, M/s. Ascendas Services (India) Private Limited, sought an advance ruling on whether the value of bus passes distributed to commuters should be included in the value of facilitation charges as per Section 15(2) of the CGST Act, 2017 and KGST Act, 2017. The applicant argued that they merely facilitate transportation services by obtaining bus passes from BMTC and providing them to commuters, charging a separate facilitation fee of ?300 plus 18% GST. The applicant contended that the value of the bus passes should not be included in the facilitation charges, as they only recover the actual cost incurred for the bus passes without any markup. However, the Authority for Advance Rulings (AAR) examined the nature of the transaction and found that the applicant is in agreement with BMTC for the provision of transportation facilitation services. BMTC requires the applicant to collect a minimum of 50 bus passes, and for every 50 passes, BMTC allots a chartered bus to the applicant. The BMTC charges tax on the bus passes sold to the applicant wherever applicable. The AAR concluded that the service provided by BMTC to the applicant is covered under SAC 996413 - Non-Scheduled Local Bus and Coach Charter Services. The applicant receives these services and then provides transportation services to the commuters. The AAR determined that the total amount charged to the service recipient by the applicant, including the value of the bus passes and facilitation charges, should be considered the value of services supplied as per Section 15 of the CGST Act, 2017. Thus, the value of the bus passes distributed by the applicant to the commuters and the facilitation charges must be included in the value of services provided by the applicant. Issue 2: Classification of the Applicant's Service as Facilitation Services The applicant also sought clarification on whether the supply of service in their hands could be classified merely as facilitation services between BMTC and the commuters. The applicant argued that they act as an intermediary, facilitating the transportation service provided by BMTC to the commuters and charging a facilitation fee for this service. The AAR, however, found that the applicant is not merely facilitating the service but is actually receiving the services from BMTC and providing them to the commuters. The agreement between the applicant and BMTC indicated that the applicant is responsible for arranging transport for the staff of various corporate clients and is required to ensure the provision of alternate transportation services if BMTC fails to provide the service. The AAR noted that the commuters or the companies are not parties to the contract between the applicant and BMTC, and the applicant is issuing bills to the companies in the ITPB, not to individual commuters. The AAR concluded that the applicant is not an intermediary as defined under Section 2(13) of the IGST Act, 2017, because the applicant is receiving services from BMTC and providing services to the commuters on a principal-to-principal basis. Therefore, the supply of service in the hands of the applicant cannot be classified merely as facilitation services between BMTC and the commuters. Ruling: 1. The value of the bus passes distributed by the applicant to the commuters and the facilitation charges is to be included in the value of services provided by the applicant. 2. The supply of service in the hands of the applicant cannot be classified merely as facilitation services between BMTC and the commuters.
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