2020 (2) TMI 552 - AAR - GST

Classification of supply - supply of services or not - amount recovered from the employees towards car parking charge payable to Shantiniketan Properties Private Limited (building authorities) - pure agent services - valuation of the services - input tax credit. HELD THAT - As per the letter dated 28th August, 2018, addressed to the applicant issued by the M/s. Shantiniketan Properties Private Limited (building authorities), there is a Rent Agreement entered into between the applicant and the building authorities and the above referred letter is issued in response to the additional parking space sought by the applicant. The initial Rent agreement copy is not provided by the applicant. Further as per the Employee Handbook provided by the applicant the amount to be recovered from monthly salary of employee availing the parking slots is around INR 1500 per month and INR 500 per month for a four wheeler and two-wheeler respectively . However we notice that this amount shown in the Employees Handbook is not tallying with the details of amount recovered from the employees provided by the party - Further, the 'trail of financial transactions to clarify the pure agent status of the company', as promised by the authorized representative of the applicant at the time of personal hearing, was also not provided by the applicant. In the absence of requisite documents, as discussed in above paras, no ruling can be given on the questions asked by the applicant - application for advance ruling disposed off.

Summary

Issues:
1. Whether the amount recovered from employees for parking charges constitutes a supply of service by the applicant to its employees?
2. If the first question is affirmative, whether the value of the supply would be NIL as a "Pure Agent" or what would be the value?
3. If GST is payable on the amount recovered from employees, can the GST paid by the applicant to the building authorities be claimed as input tax credit against the supply of parking services to employees?

Analysis:
1. The applicant, engaged in software development, sought an advance ruling on whether the parking charges recovered from employees constitute a supply of service. The applicant argued that parking facilitation is not integral to their software development business. The jurisdictional officer opined that providing parking facilities is taxable under GST.
2. The questions raised by the applicant focused on the nature of the parking charges as a supply of service, potential valuation as a "Pure Agent," and the admissibility of GST paid as input tax credit. The definitions of "Supply," "Service," and "Business" under the CGST Act were crucial in determining the applicability of GST on parking charges.
3. The ruling authority highlighted discrepancies in the documents provided by the applicant, such as inconsistencies in the amount recovered from employees and lack of clarity on free parking slot allocation. The absence of essential documents led to the inability to provide a ruling on the questions posed by the applicant.
4. The ruling concluded that without the necessary documents, including the rent agreement, financial transaction trail, and clarification on the "pure agent" status, a ruling could not be issued on the matter. Consequently, the application for advance ruling was disposed of due to the lack of essential documentation.

This detailed analysis of the judgment provides insights into the legal considerations and procedural aspects involved in determining the tax liability on parking charges in the context of GST regulations.