TaxTMI 
TaxTMI 
TaxTMI 
2024 (7) TMI 1239
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....unt of admissible input tax credit shall be made, unless the appellant has been given an opportunity of being heard. 2. Under Section 103 (1) of the Act, this Advance ruling pronounced by the Appellate Authority under Chapter XVII of the Act shall be binding only,- (a) on the applicant who had sought it in respect of any matter referred to in subsection (2) of Section 97 for advance ruling; (b) on the concerned officer or the jurisdictional officer in respect of the applicant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed. 4. Under Section 104(1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made. At the outset, we would like to make it clear that the provisions of both the Central....
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....e Appeal Application in Form GST ARA-02, the appellant had also enclosed a 'Petition for condonation of delay', as the appeal was filed after a delay of 27 days, beyond the normal time limit of 30 days from the date of receipt of the order. Accordingly, an opportunity of personal hearing was accorded to the appellant on 14.05.2024 for the limited purpose of condonation of delay. It was stated that as Shri Ganesh Kumar, Chartered Accountant, who was entrusted with the responsibility of preparing and filing the appeal, was not keeping well during the relevant period of time, the appeal could not be filed in time. As the appellant presented sufficient cause that prevented them from filing the appeal within the normal period, by way of providing documentary evidences, the delay in filing the appeal was condoned vide Order-in-Appeal No. AAAR/06/2024(AR) dated 21.05.2024. 3.4 Accordingly, the appeal is now taken up for consideration on merits. The Appellant has stated that Company has proposed to provide the facility of car to its employees in the course of employment. According to the arrangement, the Company will pay the lease premium directly to car leasing company. Overall Salary co....
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....ease premium incurred by the company was admittedly recovered from the employees concerned in actuals, the same does not qualify as a 'perquisite'. * When the appellant provides the said service to their employees on their own account, and when the element of 'perquisite' is absent in the instant case, GST is applicable on the facility of Car extended to the employees of the Applicant-Company, even if it is in the course of employment. 3.6 Aggrieved of the above decision of AAR in Advance Ruling No. 125/AAR/2023 dated 20.12.2023, the appellant has filed the present appeal. The grounds of appeal as submitted by the appellant, are under the following broad heads :- A. The -facility of car lease provided to employees under employment contract will qualify as perquisite under Income Tax Act, 1962; B. Stipulation of eligibility criteria for availing car lease facility is immaterial to ascertain whether the same is perquisite or not; C. Salary, including the perquisites provided by employer to employee in exchange of his services under employment contract is covered under Entry 1 of Schedule III of the CGST Act and not subject to GST; D. The car lease policy was not in existen....
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....acts' or the 'Grounds of Appeal' at any other point of time, the AR admitted that this has not been discussed by them so far. 4.5 The Members further invited the attention of the AR to the furnishing of 'Employment contract' and the 'Car Lease Policy' forming part of it, which the appellant claims to have furnished during the personal hearing before the AAR on 14.11.2023. The AR replied that the same was furnished along with the Appeal application filed by them. When it was pointed out that no such document has been furnished by the appellant so far in this regard, the AR admitted to the lapse on their part and undertook to furnish the same in a couple of days' time. 4.6 The appellant finally stated that when a benefit is extended to the employee, whether in cash or kind, and when the same is extended in the course of employment, it fulfills the ingredients of a 'Perquisite', and accordingly, taxes under GST are not chargeable on the same, as it falls within the scope of Entry 1 of Schedule III of the CGST Act, 2017. 4.7 As undertaken, the AR through their e-mail dated 06.07.2024 conveyed that they are submitting the Car Lease Policy and Form-16 of one of their employees who has....
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....se of employment, it was stated by the appellant that the Company will pay the lease premium directly to car leasing company and the overall Salary cost of the related employees will get reduced to the extent of cost incurred by Company to extend the expense incurred in relation to car facility provided to employees for office purpose; that the facility of car extended to employees is considered as perquisite under Income Tax Act, 1961 and due tax is required to be paid by employees on it under the head Income from Salary; that the provision of the Car lease premium to employees is not being carried out as a business activity; that CBIC vide its Circular No. 172/04/2022-GST dated 06.07.2022 has clarified that any perquisites provided by the employer to its employees in terms of contractual agreement entered into between the employer and the employee are in lieu of the services provided by employee to the employer in relation to his employment; that as the Applicant-Company is willing to provide the facility of car lease to the employees of the Company in terms of the HR policy in the instant case, the same is a perquisite for the employees. Accordingly, the applicant contended that....
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....ross salary/CTC remains the same. Where an employee avails the facility, a portion of the compensation is adjusted to the extent of instalment to be borne by him, which is nothing but a benefit extended in lieu of the "Other allowance' component of the salary/compensation of the concerned employee. * To substantiate the same, the appellant annexed the table as below in para A6 of the 'Grounds of Appeal', as an illustration where both 'Employee A' and 'Employee B' are compensated equally and are eligible for Car Lease Policy and the said policy is being availed only by 'Employee A'. Sr.No. Particulars Employee A (opts for Car Lease) Employee B (does Not opt for Car Lease) A Basic Pay 10,00,000 10,00,000 B Add : Allowances Bl House Rent Allowance 7,50,000 7,50,000 B2 Other Allowances 22,50,000 32,50,000 B3 Car Lease 1 0,00,000 - C Gross Salary 50,00,000 50,00,000 D1=A+B1+B2 Salary Payable in cash 40,00,000 50,00,000 D2-B3 Benefit of Car Lease amount adjusted from Overall compensation 10,00,000 Total CTC to the employee 50,00,000 50,00,000 5.2.3 With respect to the taxability of such benefit, th....
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.... purpose. In order to ascertain whether the instant transaction constitutes a 'Supply' or not, the basic fact as to whether the facility extended qualifies as a 'Perquisite' or not, is required to be determined in the instant case. The applicant claims the same to be a 'perquisite' for the employees and in terms of the CBIC Circular dated 06.07.2022, recovery from employees in relation to car lease premium will not be exigible to GST. 5.2.6 In this regard, we notice that Entry No. 1 of Schedule III of the CGST Act, 2017, states that "services by an employee to employer in the course of or in relation to his employment" shall be neither supply of goods nor supply of services. It could be seen here that the said entry in Schedule III basically deals with 'services by an employee to employer', and not the other way round. However, the 'services by the employer to employee', when provided in the form of perquisites, has been discussed in para 2 of clarification to issue No.5 of the CBIC Circular No. 172/04/2022-GST dated 06.07.2022, wherein it has been clarified as below:- "Any perquisites provided by the employer to its employees in terms of contractual agreement entered into betwe....
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....nt came up with a new ground that they incur and absorb certain expenses like Road Tax on behalf of the employee, but they admitted that the said ground has not been discussed by them in the 'Statement of facts' or the 'Grounds of Appeal' or at any other point of time. Though the appellant did not furnish any document relating to the incurring of expenditure on road tax, registration, etc., they furnished the documents like Form-16 (Part A & B) and Form No. 12BA for the financial year 2023-24 in respect of a specific employee who has availed the car lease facility, under their e-mail dated 06.07.2024. On perusal of the same, it is seen that an amount of Rs. 21,600/- has been reflected against the row '1(b) - Value of perquisites under section 17 (2) (as per Form No. 12BA, wherever applicable)' in Form No. 16 (Part B) relating to the said employee. Perusal of Form No.l2BA (Statement showing particulars of perquisites, fringe benefits or amenities and profits in lieu of salary with value thereof) reveals that the amount of Rs.21,600/- is reflected against 'Sl.No. 2 - Cars/Other automotive', as the value of perquisites. 5.2.9 Apart from the aspect relating to employment contracts, it....
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....mittedly deducts the exact amount from the salary of the employees concerned, i.e., to the extent of cost incurred towards the leasing of cars by the Company. We are therefore of the opinion, that extending a mere facility does not qualify as a perquisite; that a value in monetary terms is required to be extended to the employees; and that the value of perquisite for consideration is restricted to the value of actual monetary gain extended as in Form 12BA. Therefore, the contention of the appellant that extending the facility of car lease is nothing but a benefit extended to the concerned employee, is not sustainable and does not support their stand. As seen from the illustrative table annexed in para A6 of the 'Grounds of Appeal' filed by the appellant, the salary payable in cash (Sr. No. D1) of 'Employee A' who opts for car lease stands reduced to the extent of car lease amount involved, as against the emoluments accruing to 'Employee B' who does not opt for car lease. Accordingly, the view of the appellant that the car lease amount is not recovered from the concerned employee and is part of the overall compensation/CTC and that the cost of such facility is eventually borne by th....
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....the said service qualifies as a 'supply' under GST. We are of the opinion that the case of M/s. JP Morgan Services India (P) Ltd., as in the advance ruling referred above, becomes distinguishable on this aspect, and additionally, the concept of 'perquisite' gets appended to the instant issue to determine whether the said activity or transaction gets covered under 'supply' or not. Therefore the impugned ruling referred by the appellant is not applicable to the instant case. 5.3.1 The appellant puts forth the contention that eligibility criteria for availing the car lease facility is immaterial to ascertain whether the same is perquisite or not. It has been stated that the TNAAR in the impugned ruling had held that the circumstances relating to car lease premium differs basically from the other cases in view of the fact that these types of car facility are normally provided to few specific employees of the organization, and that they are not general in nature. The appellant admits the fact that the facility of car lease is not provided 'en masse', but to eligible employees only. However, it is immaterial to ascertain whether the scheme would quality as 'perquisite' or not. The appel....
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....its, or other incidental profits or benefits". It is to be noticed here that as discussed already, perquisites are seen as emoluments, benefits or profits, even in general parlance, and that they traverse beyond mere facilities provided. Further, the examples provided under the referred definition read as "e.g. free cars, club memberships, insurance, etc.", which goes to prove that a 'perquisite' is not just about providing a car facility and claiming back or recovering the cost of the car or the leasing of car. Rather, it is about providing facilities like cars, club memberships, insurance etc., free of charge or on concessional basis, so that the facilities extended are seen as benefits at the hands of the employees. The definition of 'perquisite' under Merriam Webster runs as "a privilege, gain or profit incidental to regular salary or wages-especially : one expected or promised". Here again, the terms 'privilege', 'gain', 'profit', etc., point to the fact that only value in monetary terms are seen as perquisites. 5.4.1 The other point of contention of the appellant was that salary, including the perquisites provided by employer to employee in exchange of his services under emp....
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....ect only on 03.05.2023, and therefore the same could be furnished during the filing of the application, but were furnished during the course of hearing on 14.11.2023. 5.5.2 In this regard, it was seen from the material available on record that, no employment contract/agreement has been furnished by the appellant. During the personal hearing held before the AAR on 14.11.2023, the appellant is seen to have furnished copies of various rulings, case laws and other such documents in support of their defence. On perusal of the documents furnished, it is seen that an extract of the 'Human Resources Manual' has been filed by them, that contains excerpts about Travel Rules, Kit allowance, Canteen, Uniform, Mobile phone facility and Family Occasions Memento. Under the head Travel Rules', "A detailed travel policy is enclosed as Annexure-r is mentioned, but no such Annexure-I was seen to be enclosed. Finally, as undertaken during the personal hearing held on 04.07.2024, they famished a copy of the same that read as 'Policy Manual, 2024' dated 01.03.2024, through their e-mail dated 06.07.2024, which is considered and taken on record. 5.6.1 The appellant finally states that the ownership of t....