TaxTMI 
TaxTMI 
2021 (12) TMI 774
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.... the same? 2. If answer to question no. 1 is yes, then how the value of said supply will be determined keeping in mind that employee and the applicant are related party as per provisions of GST law? 3. Further also if the answer to question no 1 is yes, then whether Input Tax Credit is admissible in respect of GST paid on inward supply of 'renting of motor vehicles service' which are used for the employee? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION -AS PER THE APPLICANT 2.1 Integrated Decisions and Systems (India) Private Limited, 'the applicant', located in Maharashtra and primarily engaged in providing software development and support services to its holding company located outside India, provides transportation faci....
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....here is no supply of services in the instant case. Hence, GST would not be applicable on part recovery transaction between applicant and its employee. 2.7 If GST would be payable on the said partial recovery, the value on which GST is to be paid, needs to be determined in terms of Section 15 of the CGST Act, read with CGST Rules 2017. 2.8 As per Section 15 (5) (a) (iii) of the CGST Act, 2017, employee and employer are treated as "related persons" and hence, valuation of the supply needs to be determined as per Rule 28 of the CGST Rules, 2017. 2.9 Presently, while the company is charging part of cab charges from employee, it is paying GST on full value of services. In view of Section 15 CGST and MGST Act read with Rule 28 of CGST Rules, open market value will be same which the company has paid to cab renting company. 2.10 As per Section 16 of the GST Act, every registered person shall be eligible to take ITC of GST paid on goods or services used or intended to be used in the course or furtherance of business. Further, in order to determine eligibility of ITC, same shall not be denied under Section 17 (5) of GST Act. 2.11. As per the relevant provisions of Section 17 (5) of the ....
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....rvice. Therefore, it is necessary to examine whether any activity or transaction carried out by supplier is "supply" before levy of tax. Definition and scope of Supply has been provided in section 7 of the Act. 3.2 As per Section 7 (1) of the Act, unless all following conditions has been satisfied any transaction or activity cannot be treated as supply: There should be involvement of two persons. It must covered under any specified form such as sale, transfer etc. It should made for consideration. It should made in the course or furtherance of business. 3.3 In the activity involved in first question (providing transport facility to employees by the applicant) the applicant and employees two persons are present as supplier and recipient of service respectively. Hence first condition is satisfied. Further, the impugned activity is in the form of sale which prescribed in section 7 (1) of the act. Thus, second condition is also satisfied. Finally, the applicant has supplied transport facility to the employees and recovered partial amount from the employees. Thus, it is clear that element of consideration is present. 3.4. As per section 2(17) of the act business includes (a) any tr....
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....istered person shall subject to prescribed conditions and restrictions, be entitled to take input tax credit of input tax charged on any supply of goods or service to him which are used are intended to be used in the course or furtherance of business. However, certain credits are blocked as provided in section 17 (5). 3.8 Section 17(5)(b)(i) states that notwithstanding anything contained in sub section 1 of section 16 and sub-section of section 18 input tax credit shall not be available in respect of leasing, renting or hiring of motor vehicles. In view of the above, it is clear that the applicant is not entitled to claim input tax credit of GST paid on inward supply of "renting of motor vehicle service "which are used for transportation of employees. Applicant is engaged in development and supply of software services and not engaged in "renting of motor vehicles service" and therefore benefit of provision to section 17 (5) (b) (i) cannot be allowed to the applicant. 04. HEARING 4.1 Preliminary e-hearing in the matter was held on 02.06.2021. The applicant was represented by Authorized Representatives Shri. Deepak Goyal (C.A), Smt. Mallika James (Senior Manager, Finance) and Shri....
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....port services to its holding company located outside India. The provision of transport facility to the employees is a welfare, security and safety measure and is not at all connected to the functioning of their business. Further, the said activity is not a factor which will take the applicant's business activity forward. 5.5 We also find that the applicant is not supplying any transport or lease/rental of vehicle service to its employees in the instant case. Further the transport or lease/rental of vehicle service is also not the output service of the applicant since they are not in the business of providing transport service. Rather, this transport facility is provided to employees by the third party vendors and not by the applicant. 5.6 We observe 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, i....