TaxTMI 
TaxTMI 
2026 (5) TMI 340
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing obtained by the applicant by fraud or suppression of material facts or misrepresentation of facts, shall render such ruling to be void ab initio in accordance with Section 104 of the Act. 5. The provisions of both the Central Goods and Services Tax Act and the Tamil Nadu Goods and Services Tax Act (herein referred to as the Act) are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Services Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Services Tax Act. M/s. RENAULT NISSAN TECHNOLOGY & BUSINESS CENTRE INDIA PRIVATE LIMITED, TP 2/1, Ascendas IT Park, Natham Sub Post Office, Mahindra World City, Kancheepuram, Tamil Nadu-603 004 (hereinafter called as the "Applicant") are registered under the GST Act with GSTIN 33AADCR7253E1ZK. The applicant primarily acts as a support center for all of its Group entities located outside India for providing various engineering, IT and IT Enable Services, Back Office and Business process outsourcing services at SEZ Unit. The applicant has sought advance ruling on the following question: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... charged. f. That the recovery made from the employees is credited to the expense account in which transportation expense is booked and debited to the salary payable account in respect of employees on the rolls of the applicant. g. That the services in relation to transportation through motor vehicles are provided by the Transportation Service Provider to all the employees, who have opted for such benefit from the applicant. It is agreed that the applicant shall enter into a contract and pay in full to the transportation service provider for the service provided during the prescribed period on behalf of the employees and nominal amount is recovered from the employees on a monthly basis and the balance amount is borne by the applicant. h. That the applicant is seeking advance ruling to ascertain the GST implication on the existing arrangement of recovering a nominal amount towards transportation facility provided to employees by the applicant for the purpose of commuting from office to identified pick-up points and vice versa. 3. Interpretation of Law by the Applicant based on the statement of facts: 3.1 On interpretation of law, the applicant stated....
X X X X Extracts X X X X
X X X X Extracts X X X X
....randix Apparel India Pvt. Ltd. AAR No. 02/AP/GST/2023, decided on 21-3-2023, • North Shore Technologies Pvt. Ltd. (2021 (49) G.S.T.L. 315 (A.A.R. - GST - U.P.)) • ION Trading India (P.) Ltd - [2020] 113 taxmann.com 609 (AAR- Uttar Pradesh) • Amneal Pharmaceuticals (P.) Ltd - [2021] 126 taxmann.com 228 (AAAR-Gujarat) • Dishman Carbogen Amcis Ltd. Advance Ruling No Guj/GAAR/R/22/2021 • Bharat Oman Refineries Ltd - [2022] 142 taxmann.com 95 • RITES Ltd-2022-VIL-283-AAR • Emcure Pharmaceuticals Ltd - [2022] 134 taxmann.com 74 (AAR - Maharashtra) d. That CBIC, vide Circular No. 172/04/2022-GST dated 6th July, 2022, has clarified as to whether various perquisites provided by the employer to its employees in terms of contractual agreement entered into between the employer and the employees are liable for GST. The applicant highlighted that since the facility itself is provided only to employees and as part of employment arrangement, such facility itself qualify as perquisite, despite a nominal amount is recovered and there cannot be supply merely there is some recovery, maximum such arrange....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... g. That a supply must involve enforceable reciprocal obligations. If something has been used, but there was no agreement for its supply between the relevant parties, any payment subsequently received by the aggrieved party is not consideration for supply. The receipt of payment is not premised on the enforcement of reciprocal obligations between parties and cannot be linked to a supply for the purpose of levying GST. Hence, the deduction in employees' salary made by the Applicant would constitute a mere transaction in money between the Applicant and its employees. Also, the Applicant wishes to highlight the judgement of Hon'ble Bombay High Court in the case of Bai Mamubai Trust, Vithaldas Laxmidas Bhatia, Smt. Indu Vithaldas Bhatia vs. Suchitra [Commercial Suit (1) No. 226 of 2017], has held that for GST to be payable on any payment, there must be the necessary quality of reciprocity to make it a 'supply'. h. That in the instant case, the Applicant deducts a pre-determined amount from the employee's salary as a recovery of expenses under employment relationship without any commercial objective. The same is also shown as a deduction in the salary slip....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e open market value. In the case of employee recoveries, the only value declared and actually received is the nominal recovery, which should be the taxable value. The correct valuation for GST purposes is the nominal amount recovered from employees for transport facilities. The balance cost borne by the employer is a perquisite, outside the scope of GST. 3.2 In the additional submissions made by the applicant during the personal hearing, the applicant adds the following arguments: i. That there is no separate commercial contract between the Applicant and employees for provision of transportation services, other than the employment contract where the facility is offered as & perquisite/benefit linked to employment. Only employees are eligible to use the facility, and the facility ceases once the employer-employee relationship terminates, indicating that the transportation is part of the employment arrangement rather than an independent business supply to employees. ii. That the recovery is nominal and not directly proportional to the actual cost of transportation, the substantial portion of which is borne by the employer purely due to the employment relationship....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ement is considered a taxable supply by the Applicant to its employees, GST liability, if any, can arise only on the nominal amount recovered from employees. The Applicant does not retain any margin on the recoveries; the entire amount recovered is effectively offset against transportation expenses and paid to the third-party transporter. Therefore, the only consideration from the employees' perspective is the nominal amount deducted from salary, which alone can form the taxable value under any interpretation that treats the arrangement as supply. 4.0 The applicant falls within the administrative jurisdiction of 'CENTER'. No remarks have been received from the State and Central jurisdictional authorities. Hence, it is construed that there are no pending proceedings against the applicant on the questions raised by them in their advance ruling application. 5.0 Personal Hearing: 5.1 The applicant was given an opportunity to be heard in person on 17.12.2025 vide this office memorandum No.39/2025, dated 04.12.2025. The applicant replied through email on 12.12.2025 stating that the Authorized Representatives of their company are out of town and are not in a position ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts Group entities located outside India for providing various engineering, IT and IT Enabled services, Back office and Business process outsourcing services at SEZ unit. The applicant has engaged contractors for providing buses for transport facilities to their employees to travel from their respective pickup location till the office premises and back. The Applicant recovers a nominal amount from the employees on monthly basis. Such recoveries are shown as a deduction in the monthly pay slip of the employees. The applicant seeks ruling on the applicability of GST on the nominal amount recovered by the Applicant from the employees. 6.2 The applicant claims that the nominal amount recovered from the salary of the employees for providing the subsidized transportation facility, cannot be considered as supply in terms of Section 7 of CGST Act, therefore, GST cannot be levied on such activity. Also, the facility of transportation is provided due to the existing 'Employer-Employee' relationship, an employee is not allowed to use the transportation facility once the 'Employer-Employee' relationship ceases i.e., when the employment is terminated. It is a facility provided....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of business 4. Supply should be made by a taxable person 5. Supply should be a taxable supply 6. Supply should be made within the taxable territory 6.8 Out of the above parameters, we are of the opinion that the most critical parameters which need to be examined elaborately are "Supply should be made in the course or furtherance of business" and "Supply should be made for a consideration". 6.9 Supply should be made in the course or furtherance of business This is the most critical aspect which needs to be examined to arrive at a conclusion as to whether the activity undertaken by the applicant is covered under the scope of supply or not. The statue does not define the phrase 'in the course or furtherance of business'. But business is defined in Section 2(17) of the CGST Act, 2017 as (17) "business" includes- (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) any activity or transaction in the nature of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ry to the applicant's business. It is to be noted here that the business activity of the applicant is to act as a support center for all of its Group entities located outside India for providing various engineering, IT and IT Enabled services, Back office and Business process outsourcing services. We are of the opinion that the transportation of employees to and from a designated place near their residences is not part of the business operations, and accordingly, not in connection with their business. 6.12 As far as the terms 'Incidental or ancillary' to business is concerned, we find that these terms have not been defined in the CGST Act, 2017. However, based on some of the circulars issued by the CBIC, an analogy could be drawn as to what constitute 'incidental or ancillary' to business. The following circulars are reproduced only to consider the essence of the words 'incidental or ancillary' used in the definition of Business, and the contents/merits per se, discussed in the circulars mentioned below, are not required to be considered for analysis. (I) C.B.I. & C. Circular No. 245/02/2025-GST, dated 28-1-2025 9. Regularizing payme....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../ unloading, packing, unpacking, transshipment, temporary warehousing etc., provided in relation to transportation of goods by road is to be treated as part of Goods Transport Agency (GTA) service, being composite supply, or these services are to be treated as separate independent supplies. 6.2 It has been brought to notice that enforcement agencies are raising demands for such services holding them leviable to GST at the rate of 18% by interpreting last para of Question No. 6 of the FAQ issued by CBIC which states that "If such incidental services are provided as separate services and charged separately, whether in the same invoice or separate invoices, they shall be treated as separate supplies", to mean that if a GTA shows packing charges, loading, unloading charges etc., separately in the invoice, the GTA becomes liable to pay GST at the rate of 18% on these services by treating them as cargo handling services. 6.3 After deliberations on the issue and based on recommendations of the 54th GST Council, it is hereby clarified that ancillary or incidental services provided by GTA in the course of transportation of goods by road, such as loading/unloading, packing/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ontinue even when the transportation facility is not provided to their employees. Even when such facility were not provided by the applicant, the employees would commute to and from the premises of the applicant. The facility of arranging buses or mini buses for transportation is not mandatory but is only an option given by the applicant company to their employees. When a specific query in this regard was raised by the Members during the personal hearing held on 20.01.2026, the AR explained in clear terms that it is not mandatory on the part of the employees and that they can opt out of the option and arrange their own transport. We are therefore of the opinion that the transportation facility provided to their employees is not in the course of business, since it is only a welfare measure or a facility extended by the applicant company to their employees, who in turn have the liberty to exercise the option or otherwise. 6.16 Further, we find that in common parlance, furtherance means advancement, and therefore furtherance of business may also be seen as advancement of business. It may be noted that for instance, when an employer intends to provide training to the employees in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iders, i.e., the Transport Service Providers, but recovers only a nominal portion of the transportation cost from the employees, whereby the remaining portion of the transportation cost is borne as expenditure by the applicant. Further, since the nominal amount recovered from the employees forms part of the total cost reimbursed to the transportation service providers, no consideration actually accrues to the applicant. The recovery of the nominal amount from the employees is in the nature of cost-sharing of a part of expense and not consideration for a transport service. 6.20 Therefore, we find that both the basic parameters for an activity to be considered as 'supply', viz., (i) supply should be in the course or furtherance of business, and (ii) supply should be made for a consideration, are not fulfilled in the instant case. In conclusion, the arrangement of a fleet of motor vehicles to transport employees from designated pick-up points to the applicant's office premises and back to such points after work hours through buses/mini-buses engaged by entering into contracts with third party transport service providers ("Transport Service Providers....