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TMI Blog2021 (12) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... lity 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. - GST-ARA-116/2019-20/B-113 - - - Dated:- 16-12-2021 - SHRI. RAJIV MAGOO, AND SHRI. T. R. RAMNANI, MEMBER No. GST-ARA-116/2019-20/B-113 Mumbai, dt. 16.12.2021 PROCEEDINGS (Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act respectively] by M/s. Integrated Decisions And Systems India Pvt Ltd., the applicant, seeking an advance ruling in respect of the following q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,17,073 11,79,000 3,17,073 April 2018 to March 2019 97, 09,839 4,85,492 17,52,000 4,85,492 Total 1,60,51,328 8,02,565 29,31,000 8,02,565 2.3 The applicant feels that, GST would not be applicable on partial recovery amount (as partial recovery from employees is not supply of services) by considering the transaction as outward supply and the company would not be eligible to avail ITC of inward supply of cab services. If in case of the company is liable to pay GST at open market value (on partial recovery amount) then ITC of GST paid on cab services would be allowed. B. STATEMENT CONTAINING APPLICANT'S INTERPRETATION OF LAW 2.4 As per Section 9 of the CGST Act, GST shall be levied on supplies of goods or service. Further, the term 'supply' has been defined under Section 7 of CGST Act, 2017. 2.5 The applicant's business is, providing support services for software and not providing cab services to employees. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to applicant. Additional Submission dated 09.11.2021 2.13 Reliance is also placed on the ruling passed by The Authority for Advance Ruling Under GST, Uttar Pradesh in the case of M/s. North Shore Technologies P. Ltd. [2021 (49) G.S.T.L. 315 (A.A.R. GST- UP.)] wherein it has been held that - arranging transport facility for the 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. 2.14 As per above mentioned ruling, providing transport facility to its employees cannot said to be in furtherance of business and would not be considered as supply under GST. Therefore, transaction of recovery of optional subsidized shared transport facility would not be taxable under GST. Applicant Submission dated 01.12.2021:- 2.15 Reliance is placed on the following case laws - a. Maharashtra Authority for Advance Rulings in case of M/s. Posco India Pune Processing Centre (P,) Ltd [GST-ARA-36/2018- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n with main business software development can also termed as incidental or ancillary to main business. Thus, said activity is carried out in course or furtherance of business. 3.5 In view of aforesaid submission, it is clear that all required conditions has been satisfied and part recovery of renting of motor vehicle services/cab services from employees in respect of the transport facility provided to them would be treated as 'supply' within meaning of section 7 of the act and the applicant is liable to pay tax under the act. 3.6 Further, as per section 15 (1), value of supply of goods or services shall be the transaction value, which is price actually paid or payable for said supply, where the supplier or the recipient of supply are not related and price is the sole consideration for supply. However, where supplier and recipient are related parties then, in view of section 15 (4) value of supply shall be determined as per provision of Rule 28. Rule 28 provides that value of supply of goods or services, where supplier and recipient are related persons, shall be open market value of such supply. And where open market value is not available, value shall be value of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Smt. Mallika James, Senior Manager, Finance, Shri. Vivek Dhaybar, Asst. Manager and Shri. Sunil Goyal were present. Jurisdictional officer Shri. Ramesh Phadtare, Deputy Commnr. PUN-BST-E-001, Pune-1 was also present. 05. OBSERVATIONS AND FINDINGS: 5.1 We have perused the records on file, gone through the facts of the case, submissions made by the applicant as well as the department and have examined the matter in detail. 5.2 As per the submissions made, the applicant is engaged in providing software development and support services to its holding company located outside India and as a welfare, security and safety measure, the applicant is providing transport facility to its employees for which they are availing `renting of motor vehicles service', 'cab services' from their vendors. The applicant initially pays the entire amount to concerned service providers who provide them with cab services and subsequently recovers partial amount from the respective employees who avail of the said facility. Further, the third party vendor issues bill in the name of the applicant and charges GST therein. As regard to the payment to the third party vendor, towards transp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t applicable on such nominal amounts recovered from its employees. 5.8 Further reference is also made to the decision of the Uttar Pradesh Advance Ruling Authority in respect of the advance ruling application filed by M/s North Shore Technologies Private Limited. In the said matter a similar question was raised by the applicant as to whether the subsidized shared transport facility provided to employees in terms of employment contract through third party vendors, would be construed as Supply of service by the company to its employees. The said authority has observed that, the applicant was in the business of software development and staff augmentation services and not in the business of providing transport service. The facility provided to their employees was not integrally connected to the functioning of their business and therefore, providing transport facility to its employees cannot said to be in furtherance of business. 5.9 Accordingly, we are of view that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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