Part recovery of ‘Renting of Motor Vehicles Services’ or ‘Cab Services’ from Employees on Transport facility provided to them is not ‘Supply’: AAR [Read Order]

The Maharashtra Authority of Advance Ruling (AAR) held that part recovery of ‘renting of motor vehicles services’ or ‘cab services’ from employees in respect of the transport facility provided to them is not ‘supply’.

The applicant, Integrated Decisions and Systems (India) Private Limited, located in Maharashtra and primarily engaged in providing software development and support services to its holding company located outside India, provides transportation facility to its employees. Services are being provided for security of staffs which have female employees also. In order to carry out the said function, the applicant is availing ‘renting of motor vehicles service’ ‘cab services’. In such cases, the applicant initially pays the entire amount and subsequently as per policy of the company, partial amount is recovered from the respective employees.

The applicant has sought the advance ruling on the issue whether part recovery of ‘renting of motor vehicles services’ / ‘cab services’ from employees in respect of the transport facility provided to them would be treated as ‘supply’ as per provision of GST and whether GST is leviable on the same.

The coram of Rajiv Magoo and T.R.Ramnani ruled that the 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.“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 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,” the AAR said.

Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.