ITC available on GST charged by the service provider on hiring of bus/ motor vehicle having seating capacity of more than 13 persons for transportation of employees
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Name of the applicant: |
Tata Motors Limited |
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Case Details: |
GST-ARA-23/2019-20 |
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Order passed by: |
Maharashtra Authority for Advance Ruling |
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Date of Order: |
25/08/2020 |
Question before authority:
Q-1: Whether ITC is available to the applicant on GST charged by service provider on hiring of bus/ motor vehicle having seating capacity of more than 13 persons for transportation of employees to & from workplace?
Answer:
Section 17(5) had clearly debarred ITC on motor vehicles or conveyances used in the transport of passengers till the date of amendment i.e. 01.12.2019. However, with effect from 01.12.2019, ITC has been allowed on leasing, renting or hiring of motor vehicles, for transportation of passengers, having approved seating capacity of more than 13 persons including the driver. Therefore, the applicant shall be eligible for Input Tax Credit in this case.
Q-2: Whether GST is applicable on nominal amount recovered by applicants from employees for usage of employee bus transportation facility in non-air-conditioned bus?
Answer: The applicant’s contention that they are eligible for exemption from GST under Sl. No. 15(b) of Notification No. 12/2017- Central Tax dated 28.06.2017 in respect of nominal amount of recoveries made from their employees towards bus transportation service, is not correct.
As per clause-1 of Schedule-III, services by an employer to employee in the course of or in relation to his employment shall be treated neither as a supply of goods nor a supply of services. Therefore, the transactions between the applicant & their employees, due to the “Employer Employee” relationship is not a supply under GST. Therefore, in view of Schedule-III, GST is not applicable on the nominal amounts recovered by the applicant from their employees. Further, it was also clarified by CBIC vide press release dated 10.07.2017 that supply by the employer to employee in terms of contractual agreement of employment entered into between employer and employee (which are treated as a part of salary) will not be subject to GST.
Q-3: If ITC is available as per Q-1, whether it will be restricted to the extent of cost borne by the employer (applicant)?
Answer: The applicant citing the decision of the Hon’ble High Court of Bombay in the case of CCE. Nagpur vs. Ultratech Cements Ltd. Reported in 2010 (260) ELT 369 (Bom)- ITC shall not be admissible on the part of cost borne by the employee and thus ITC will be restricted to the extent of cost borne by the applicant.
Click on the following link to access complete order:- Tata Motors Limited Advance Ruling- Maharashtra ARA
Also read the following AAR:- North Shore Technologies Private Limited- UP ARA
