TMI Blog2021 (3) TMI 707X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and staff augmentation services and not in the business of providing transport service. Rather, this is a facility provided to their employees under the obligation of Law of the Land. Moreover, this activity is not integrally connected to the functioning of their business. Also, the said activity is not a factor which will take their business activity forward. Thus, providing transport facility to its employees cannot said to be in furtherance of business. Thus, arranging the transport facility for the employees and recovery from employees towards such transport facility, under the terms of the employment contract, cannot be considered as supply of service in the course of furtherance of business. Providing transport facility to employees is no where connected with the business of the applicant - thus, we are in unison with the applicant that arranging the transport facility for the employees is definitely not an activity which is incidental or ancillary to the activity of software development, nor can it be called an activity done in the course of or in furtherance of development of software as it is not integrally connected to the business in such a way that without th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been asked by the applicant, in his application dated 22.01.2020, before the Authority: - i. Whether the subsidized shared transport facility provided to employees in terms of employment contract through third party vendors, would be construed as Supply of service by the company to its employees? ii. If the answer to above question is in affirmative, how the value of subsidized shared transport facility provided to employees under employment contract, will be determined by the applicant? iii. If the answer to question 1 is in affirmative, under which service classification, the activity of arranging transport facility for employees, would fall? iv. If the answer to question 1 is in affirmative, who would be liable to pay the GST and what rate of GST would be applicable on the value of supply determined under question 2 above? 5.1) The applicant has further submitted that as per their understanding, they are in the business of software development and staff augmentation service which is their business activity in terms of the definition of business in the section 2 (17) of the CGST Act. Arrangement of transport facility to their employees and making pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horized representative reiterated the submissions already made vide application dated 22.01.2020 and also submitted sample copies of invoice, issued by various tour operators to the applicant, through email. 7). The application for advance ruling was forwarded to the Jurisdictional GST Officer (Assistant Commissioner, CGST CEX, Division-1, Noida) to offer his comments/views/verification report on the matter. However, no reply was received despite of repeated reminders. Accordingly, it is deemed that they are in agreement with the applicant and no proceeding, is neither pending nor decided, against the applicant on the question raised in the advance ruling application. DISCUSSION AND FINDING 8). At the outset, we would like to make it clear that the provisions of both the CGST Act and the UPGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the UPGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / UPGST Act would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther, as per Schedule II , as referred in the Section 7 of the CGST Act, 2017, the following activities to be treated as supply of goods or supply of service:- 1. Transfer:- (a) any transfer of the title in goods is a supply of goods; (b) any transfer of right in goods or of undivided share in goods without the transfer of title thereof, is a supply of services; (c) any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods. 2. Land and Building :- (a) any lease, tenancy, easement, licence to occupy land is a supply of services; (b) any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services. 3. Treatment or process :- Any treatment or process which is applied to another person's goods is a supply of services. 4. Transfer of business assets:- (a) where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software; (e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; and (f) transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration. 6. Composite supply:- The following composite supplies shall be treated as a supply of services, namely:- (a) works contract as defined in clause (119) of section 2; and (b) supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration. 7. Supply of Goods :- The following shall be treated as supply of goods, namely:- Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration. 14). The term Service is defined, as per Sub-Section (102 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds said transportation charges. We further observe that the applicant is in the business of software development and staff augmentation services and not in the business of providing transport service. Rather, this is a facility provided to their employees under the obligation of Law of the Land. Moreover, this activity is not integrally connected to the functioning of their business. Also, the said activity is not a factor which will take their business activity forward. Accordingly, we are of the opinion that providing transport facility to its employees cannot said to be in furtherance of business. 17). We also observe that the Maharashtra Authority for Advance Ruling (`AAR'), in case of M/s. Posco India Pune Processing Center Private Limited', vide Order No. GST-ARA-36/2018-19/B-110 Mumbai, dated 07.09.2018 has ruled that: There is no way that the 50% amount recovered can be treated as amount received for service rendered, since this entire amount is paid to the insurance company which is providing mediclaim facilities to the employees and their parents. Such recovery of 50% premium amounts by the applicant from their employees cannot be supply of service und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of service by the company to its employees? Ans : Answered in negative. Question 2- If the answer to above question is in affirmative, how the value of subsidized shared transport facility provided to employees under employment contract, will be determined by the applicant? Ans : As the answer to first question is in negative hence the question becomes redundant. Question 3- If the answer to question 1 is in affirmative, under which service classification, the activity of arranging transport facility for employees, would fall? Ans : As the answer to first question is in negative hence the question becomes redundant. Question 4- If the answer to question 1 is in affirmative, who would be liable to pay the GST and what rate of GST would be applicable on the value of supply determined under question 2 above? Ans : As the answer to first question is in negative hence the question becomes redundant. 21). This ruling is valid, only within the jurisdiction of Authority for Advance Ruling Uttar Pradesh and subject to the provisions under Section 103(2) of the CGST Act, 2017 until and unless declared void under Section 104 (1) of the Act. - - TaxTMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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