TaxTMI 
TaxTMI 
2020 (3) TMI 1322
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.... to the CGST Act, 2017 would also mean a reference to the same provisions under the UPGST Act, 2017. Brief Facts of the Case 1) M/s ION Trading India Private limited, Building No. 2, Infospace, 4-6th Floor, Block-B, Plot-2, Sector-62, Noida, Uttar Pradesh (here in after called the appellant) is a registered assessee under GST having GSTN: 09AAECA4325R1Z9. 2). The appellant is a private limited company, wholly owned subsidiary of M/s ION Trading UK Limited and engaged in the business of software development which is exported to the overseas company. The appellant entered into a rent agreement with M/s Shantiniketan Properties Private Limited (Building Authority in short) for renting of office premises including certain number of free car parking spaces and certain number of parking spaces on payment of agreed rent per car parking space per month. As the aforesaid car parking spaces were not sufficient, and the employees are in need of more parking spaces, the appellant facilitates procurement of car parking spaces from the Building Authority and procures it on payment of agreed lease charges per car parking space per month. 3). The appellant bears part of the lease charg....
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.... Section 2 (17) of CGST Act, includes primary business activity of software development services for the Overseas Company. 7.3) The appellant also relied upon the Advance Ruling pronounced by the Maharashtra Authority for Advance Ruling, in case of M/s. Posco India Pune Processing Center Private Limited, wherein it was held that that "the applicant is of parents' health insurance expenses from employee does not amount to 'supply of service' under Section 7 of the CGST Act, 2017." 7.4) The appellant further submitted that in case the said activity is supply then the value of such supply should be NIL, as the same is being provided in the capacity of a pure agent. The appellant also submitted that they are not utilizing the amount recovered from the employees (i.e. parking charges) for their own benefit and whatever amount is collected from the employees is passed on to the Building Authority. Since all the four conditions of Rule 33 of CGST Rules are fulfilled, hence, the appellant has opined that it qualifies as a Pure Agent of the employees availing parking facility. 7.5) The appellant submitted that in case, the Authority does not accept the above view and is....
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....plicable provisions of CGST Act, 2017, as the activity of facilitation of parking space is not in the course or furtherance of business of software development. b. If the same is considered as supply then the value of such supply would be nil as the same is being undertaken by the appellant as pure agent. c. The input taxes paid/payable by the appellant, for the parking space, should be admissible as input tax credit to the appellant, if the parking facilitation services are deemed as taxable supply of services leviable to GST. 10). We observe that the contention of the appellant is that while facilitating the car parking space for employees whether the amount recovered from the employees towards car parking charges is a "Supply of service" by the applicant to its employees. 11). 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 ....
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....upply are in addition to the services he supplies on his own account. Explanation.- For the purposes of this rule, the expression "pure agent" means a person who- (a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both; (b) neither intends to hold nor holds any title to the goods or services or both so procured or supplied as pure agent of the recipient of supply; (c) does not use for his own interest such goods or services so procured; and (d) receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account." 14). As regard to the condition "the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the third party on authorization by such recipient" the appellant has submitted that they obtains parking facility on authorization/request made by their employees and makes payment thereof only on the basis of said authorization. With respect to condition "the payment made by the pure agent on beha....
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.... will be used by the Applicant for his own interest". In the instant case also, we observe that the appellant has contended that they are transferring the entire amount collected, from their employees towards parking charges, to the Building Authorities. Accordingly, in view of aforesaid discussion we observe that the value of the services in the present case will be NIL, as the appellant is providing the same in the capacity of a Pure Agent, subject to the fulfillment of the conditions prescribed for "Pure Agent". 17). Now coming to the third question i.e. if the GST is payable on the such amount recovered from the employees, whether the GST paid by the applicant to building authorities towards car parking charges would be admissible as input tax credit against supply of car parking services to employees, we observe that though the activity undertaken by the appellant is a supply of service, in terms of Section 7(1) of the CGST Act 2017, however the value of the service would be nil, as the appellant is acting in the capacity of Pure agent for their employees, subject to the fulfillment of conditions. Accordingly the question becomes redundant. 18). In view of discussions he....