TaxTMI 
TaxTMI 
2021 (3) TMI 707
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....n for advance ruling filed by the applicant, they provide optional subsidized shared transport facility to their employees for to and from commutation between office and residence. This facility is provided by third party vendor who issues bill in the name of the applicant and charges GST therein. However, the applicant has not availed any input tax credit on the same. As regard to the payment to the third party vendor, towards transport charges, the applicant deducts subsidized amount from the salaries of employees and bear the balance cost itself. 4). As per applicant, their standard working hours are 12.00 pm to 09.00 pm and as per Section 22 of the U.P. Dukaan our Vanijya Adhisthan Adhiniyam,1962 read with Notification No. 2398/ 36-03-05/ dukan-Vanijya/ 99 dated 28.10.2005, they are required to arrange transport facility for the female workers for onwards and return journey, between work place and home, if the female workers are employed from 7.00 pm to 10.00 am. In view of this, the applicant is providing transport facility to its employees. 5). Accordingly, the following questions have been asked by the applicant, in his application dated 22.01.2020, before the Authorit....
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....tion of the activity under consideration and in terms of the press release enumerated above, the activity under consideration is not a supply and accordingly, the value of the transport facility arranged by the applicant, under the terms of employment contract, through the third party vendor shall be nil. 5.4) As regard to the service classification of the activity, the applicant has submitted that, if the activity is treated as 'supply of service' then it is not clear that under which service classification would the activity fall. 5.5) With reference to the person liable to pay the GST and applicable rate, the applicant has submitted that the value of the activity of providing transport facility to its employees under contractual obligation, with reference to the payment of GST, would be Nil and accordingly, there will be no GST liability on the said amount. 6). The applicant was granted a virtual hearing on 26.06.2020 through video conferencing. Shri Rakesh Nanda, Chartered Accountant/ Authorized representative of the applicant attended the virtual hearing. During the hearing, the authorized representative reiterated the submissions already made vide application....
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....in affirmative, who would be liable to pay the GST and what rate of GST would be applicable on the value of supply determined under question 2 above? 11). The first question before us to decide is to whether the subsidized shared transport facility provided by the applicant to its employees, in terms of employment contract, is a "Supply of service" by the applicant to its employees. 12). In this regard, we observe that Section 7(1) of the CGST Act 2017 defines the term "Supply" as: "7. (1) For the purpose of this Act, the expression "supply" includes- a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; b) import of services for a consideration whether or not in the course or furtherance of business; and,; c) the activities specified in Schedule I, made or agreed to be made without a consideration; d) the activities to be treated as supply of goods or supply of service as referred to in Schedule II. 13). Further, as per "Schedule II", as referred in the Se....
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....art thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. Explanation.-For the purposes of this clause- (1) the expression "competent authority" means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely:- (i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972; or (ii) a chartered engineer registered with the Institution of Engineers (India); or (iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority; (2) the expression "construction" includes additions, alterations, replacements or remodelling of any existing civil structure; (c) temporary transfer or permitting the use or enjoyment of any intellectual property ri....
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....in connection with commencement or closure of business; (e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members; (f) admission, for a consideration, of persons to any premises; (g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation; (h) services provided by a race club by way of totalisator or a licence to book maker in such club ; and (i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities;". 16). From the details/documents provided by the party, we observe that the applicant is transferring the entire amount collected from their employees, to the third party vendor who is providing transport services to their employees. We also observe that the applicant, in his application, has informed that apart from subsidized amount collected from the employees, they are also adding up a considerable amount into it and then paying it to the t....
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....ty, under the terms of the employment contract, cannot be considered as supply of service in the course of furtherance of business. Providing transport facility to employees is no where connected with the business of the applicant. 19). Accordingly, we are in unison with the applicant that arranging the 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. 20). Further, coming to the subsequent questions, we observe that the subsequent questions in the application apply only when the answer of first question is in affirmative. As we are of the view that arranging transport facility to its employee is not a supply of service, accordingly the remaining questions become redundant and merit no discussion. 20). In view of the above discussions, we, both the members unanimously rule as under; RULING Question 1- Whether the subsidized shared transport facility provided to employ....