The Gujarat Appellate Authority of Advance Ruling (AAAR) has ruled that Emcure is not liable to pay GST on the free bus transportation facility provided to its employees.
The bench of Rajeev Topno and B V Siva Naga Kumari has reject the appeal filed by the department and upheld the ruling of the Authority of Advance Ruling (AAR) by which it was held that GST, at the hands of M/s Emcure, is not leviable on the amount representing the employees portion of canteen charges, which is collected by M/s Emcure and paid to the Canteen service provider. GST, at the hands of M/s Emcure, is not eligible for free bus transportation facility provided to its employees. ITC on GST paid on canteen facility is blocked credit under Section 17 (5)(b)(i) CGST Act and inadmissible to M/s Emcure. ITC on GST paid on hiring of Bus, having approved seating capacity of more than 13 persons used for transportation of passengers, is admissible.
M/s. Emcure Pharmaceuticals Limited, hereinafter referred to as M/s. Emcure for the sake of brevity, submits that it provides canteen and bus transportation facility to its employees and that the canteen and bus transportation facility are part and parcel of the employment arrangement with the employees.
M/s. Emcure submits that it provides the canteen and bus transportation facility to its employees based on the Human Resource (HR) Policy. Based on the agreed terms of the HR Policy, M/s. Emcure is entitled to make recoveries at subsidized rates for facilities provided by them at its factory.
The department appealed against the AAAR’s ruling on the grounds that the ruling nowhere specifies GST exemption for bus transporter who is the third party service provider. Emcure as an applicant cannot seek ruling on behalf of others ie third party bus transporter service provider.
The AAAR held that the perquisite of providing free bus transportation by respondent to their employee in terms of contractual agreement entered into between the respondent and their employee are in lieu of the services provided by employee to the employer in relation to his employment and will not be subjected to GST when the same are provided in terms of the contract between the employer and employee.
The AAAR concured with the view of the GAAR in so far as it holds that M/s. Emeure [respondent] is not liable to pay GST on free bus transp station facility provided to its employees.
Appellant Name: The Assistant Commissioner, CGST, Ahmedabad North (M/s. Emcure Pharmaceuticals Ltd)
Date: 30/12/2024
