Employee transportation facility with nominal cost recovery is not a GST supply when arranged as a welfare perquisite.

A welfare-oriented employee transportation facility arranged through a third-party transporter was held not to be a taxable supply under Section 7 of the CGST Act. The employer merely arranged transport and recovered only a nominal cost share from employees; the actual transportation service was supplied by the third-party transporter, not by the employer. Because the facility was optional, employee-specific, and not incidental or ancillary to the employer's core business, it was not regarded as provided in the course or furtherance of business. The authority also treated the facility as an employment perquisite, which falls outside GST. Accordingly, the nominal recovery did not constitute consideration for supply.

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Issues: Whether the nominal amount recovered from employees for transportation arranged through a third-party transporter constitutes a taxable supply under Section 7 of the Central Goods and Services Tax Act, 2017.

Analysis: The arrangement involved two distinct transactions: the transport service provider supplied transportation to the employer, while the employer merely arranged employee transportation and recovered only a nominal portion from salary. The activity of arranging buses for employees was held not to form part of the employer's core business of providing engineering, IT and business process outsourcing services. It was also held not to be incidental or ancillary to that business, and not to be in the course or furtherance of business, since the facility was optional, welfare-oriented, and could be opted out of by employees. The authority further found that the nominal recovery did not constitute consideration for a supply by the employer, because the actual transport service was supplied by the third-party transporter and the recoveries were only part of cost-sharing. Independently, the transportation facility was treated as a perquisite under the employment arrangement, and the authority relied on the principle that such employer-employee perquisites fall outside GST.

Conclusion: The nominal amount recovered from employees for the transportation facility does not amount to supply under Section 7, and the issue is answered in favour of the assessee.

Ratio Decidendi: A welfare-oriented employee transportation facility arranged through a third-party transporter, where the employer merely recovers a nominal share of cost and retains no consideration, is not a supply when it is neither in the course nor in furtherance of business and is covered as an employment perquisite.

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