Employer sell Car to Employee which is used by employee. what is GST impact on invoice

[gopinath lakshmanan]

Dear Sir,

Mr.X (employee) is working in Y Ltd (employer). Y bought car from Z Ltd under lease which is group company. Now X got car from Y.car price ₹ 8.11 lakh inclusive of VAT 14.5% (Rs95623). Mr.X is leaving the company and there is no surrender option. Mr.x compulsory to buy the car the invoice price ₹ 7.64 and charging GST @ 29% ₹ 2.21 lakh on Fair Market Value. Is liable to pay GST by employee? if yes, what is the applicable rate under GST law. Pls clarify.

AI Summary

Supply in course of business: GST may apply to an employer's sale of a company car if treated as a business supply.
GST liability on an employer's sale of a company car depends on whether the sale is a Supply "in the course or furtherance of business." If the employer is not engaged in selling vehicles and the car was held for use, the transaction may fall outside the definition of supply and not attract GST. Practitioners disagree: some advise the employer must charge GST and collect it from the employee, while others rely on precedents holding disposals of used assets incidental to business operations are not taxable as business supplies. Applicable tax rates and possible cess become relevant only if the transaction qualifies as a supply.