Goods and Services Tax – Started By: – Kusalava InternationalLimited – Dated:- 8-5-2018 Last Replied Date:- 22-6-2018 – we are mfg co and provide transportation facility to employee from home to factory and factory to home for that we have purchased bus and given to one person(Unregistered Person) to run bus.For that we are paying every month bill to him.(including Diesel,Driver Salaries and his commission)1.What is the rate of GST to be charged on Bill if he is registered?Please refer SAC Code.2.Can we claim ITC on that bill? – Reply By Praveen Nair – The Reply = SAC – 9964 @18%. As per section 17(5) of the CGST Act input tax credit shall not be available in respect of motor vehicles and other conveyances except when they are used for making the following taxable supplies; Further supply of such vehicles or conveyances. Transportation of passengers. Imparting training on driving, flying, navigating such vehicles or conveyances. For transportation of goods. Transportation of passenger
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
same fixed point. This service cannot be classified in the nature of personal consumption either as the activity is related to business only. Further this transportation service cannot be classified under rent-a-cab service. As such, I feel, GST input tax credit is available in this case. would invite experts counter opinion on this. – Reply By Alkesh Jani – The Reply = Sir, For ready reference please allow me to reproduce relevant portion of Section 17(5) of CGST, Act, 2017. (5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely:- (a) motor vehicles and other conveyances except when they are used- (I)for making the following taxable supplies, namely:- (A) further supply of such vehicles or conveyances ; or (B) transportation of passengers; or….. For better understanding meaning of cab is important and meaning was assigned in the erstwhile Finance Act (
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
1988, are covered under Rent-a-cab service. Based on above, I am of the view that ITC is not available in the instant case. Our experts may correct me if mistaken. Thanks – Reply By KASTURI SETHI – The Reply = Sh.Alkesh Jani Ji, Top most reply. Crystal clear interpretation. – Reply By JSW CEMENTLIMITED – The Reply = Sh Alkesh Janiji, appreciate your analysis. But, still I am of the same view that credit of service provided by using the company's bus is available to a manufacturer on the following ground. In the absence of definition of cab in GST Act, you have to refer the definition given other existing law in force viz; motor vehicle Act only and not repealed law (i.e.section 65(20) of Finance Act which was in in force till 30.06.2012). During Service tax regime, credit on transportation of employees were not available and department has issued a no. of SCNs but in GST transportation of employee would be covered under input tax credit eligibility norm for the reason that bus is
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
in which the driver sits . Now rent-a-cab means renting of the space which controls the motor vehicle. The bus falls as motor vehicle having capacity of carrying more than 12 passengers and falls with the ambit of Rent-a-cab service. Repeating that an employee cannot be termed as passenger . If I accept your contention that bus is not a cab then too it is covered under Section 17(5)(a)(i)(B) of CGST Act, 2017, ITC with regards to motor vehicle except for transportation of passenger, is not available. Let me thank Sh. Kasturiji,Sir for expressing their views. Our experts may correct me if mistaken. Thanks – Reply By JSW CEMENTLIMITED – The Reply = Sir,Here the queriest is not asking for eligibility of ITC on Bus, but his query is with regard to services availed for transportation of employees. ITC on buses purchased for the purpose of transportation is not available but services provided by using the buses for transportation of employees are available. The meaning provided in Cambridge
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ility extended to the employee by the employer, this service is not obligatory for an employer to provide to its employee under any law for the time being in force. However, as there are various decision in the erstwhile law allowing the Credit as input service but that depends upon the facts and circumstances of the case. Further, it is onus on the assessee to prove the nexus.Request for comments.Thanks – Reply By JSW CEMENTLIMITED – The Reply = SirPresently, most of the companies are located in remote areas away from the city, and almost all the companies are providing pick and drop facilities to its staff and sub-staffs for the reason that they reach office and plant in time so that production is not hampered. This facility may be seen as a facility given to employee for the benefit of business only. Unless there is business requirement companies will not extend this facilities. Let's talk about a BPO where can facilities are given to its employees due to time constraint, is it
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
g. However, there is a slim chance on the ground of challenging the definition of 'passenger' in this context. – Reply By JSW CEMENTLIMITED – The Reply = Kasturi sirI respect your interpretation and experience also. Still I am not convinced as to why we are comparing employees with passenger, employer employee relationship and all. The service is not falling under rent a cab service where eligibility is restricted except it is performed under as an obligation under some law, it can not be said to be a welfare facility, it is used for furtherance of business, it helps people to reach workplace in time attend to their duty timely,. Directly or indirectly it has a bearing on the manufacturing business, still all the experts are negative towards eligibility. – Reply By Alkesh Jani – The Reply = Sir, I agree that by way of discussion we may reach to some good conclusion. My participation here is to meet the new horizon. Now coming to the point, the facility extended to employee is d
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
The grounds of notice, orders and appeal and person representing the case is important and than too the decisions may not be expected or favorable. The case law, as on now, have not attained its finality, I may agree with the contention in future. Please offer your comments and correct me if mistaken. Thanks, – Reply By Anubhav Bansal – The Reply = Deal All,I went through entire discussion in this thread which mainly is on eligibility of ITC in this case of services.Now, I seek experts opinion on what will be the GST treatment of this service in hands of the Company when they are giving this service to employees i.e. will it be consider as supply in terms of the provision of CGST act and will company have to discharge GST liability in case:-1. When the company is recovering partial amount towards this service cost from the employees.2. When the company is giving this service free of cost.This question is in light to the AAR, Kerala ruling in case of M/S Caltech Polymers Pvt. Ltd., Mala
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
usal: ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION 1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets. 2. Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business: Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both. Further, as per the explanation to section 15, for the purposes of CGST Act:- (a) persons shall be deemed to be related persons if – (i) ………..; (ii) ……..; (iii) such persons are employer and employee; Conjoint reading of this 2 provisions of the act make this service as taxable even when an employer is giving it for free of cost. Please let me know your thoughts on the matter and how do you take it? Regards, Anubhav Bansal – Reply By JSW CEMENTLIMITED –
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ng a gift. Another issue is the taxation of perquisites. It is pertinent to point out here that the services by an employee to the employer in the course of or in relation to his employment is outside the scope of GST (neither supply of goods or supply of services). It follows therefrom that supply by the employer to the employee in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST. Further, the input tax credit (ITC) scheme under GST does not allow ITC of membership of a club, health and fitness centre [section 17 (5) (b) (ii)]. It follows, therefore, that if such services are provided free of charge to all the employees by the employer then the same will not be subjected to GST, provided appropriate GST was paid when procured by the employer. The same would hold true for free housing to the employees, when the same is provided in terms of the contract between the employer and employee and is part and parcel of the cost-to-
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
mehow save the commission cost being paid by the manufacturing company to the person. – Reply By HIREGANGE& ASSOCIATES – The Reply = My views are as below: a): 17 (5) (a) not applicable as it blocks credit on supply of motor vehicles when supplied as such but not on the services provided by using such motor vehicle. Accordingly, no need of considering definition of passenger/employee etc. b) Restriction in 17 (5) (iii) is on the rent a cab not renting of motor vehicle. Erstwhile Cenvat Credit Rules excluded from the definition of input services services provided by way of renting of a motor vehicle . If the intention of law makers under GST was to disallow credit on buses, they could have used similar language. (i.e. motor vehicle instead of rent a cab) c) Cab is defined separately from Motor Vehicle under Motor Vehicle Act which includes vehicle having passenger capacity upto 12 passengers. Thus it is one of the type of motor vehicle but it cannot be said that all cab includes all nat
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
allowed as gradually credits would become more seamless in future. – Reply By YAGAY and SUN – The Reply = Get it clarified from the Law Makers as there are certain words on which no definition is provided in the GST Law. – Reply By Anubhav Bansal – The Reply = Dear Venkat Ramanji,Thanks for sharing the extract of those advertisement. After reading it, I am of the opinion that your conclusion basically is relied upon following extracts of the advertisment it follows therefrom that supply by the employer to the employee in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST. If this be the case then even the partial recovery form the employee can be said to be a contractual agreement between employer and employee. Then why should this partial recovery from the employees is liable for GST in hands of employer? Reference to the ruling of AAR Kerala bench.Regards,Anubhav Bansal – Reply By JAIPRAKASH RUIA – The Reply = Very happy t
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ansportation of goods; Based on above, it is clear that law has very specifically conveyed that ITC is available ONLY for taxable supply i.e. (i) further supply of such vehicles, (ii) for transportation of passengers or goods and (iii) imparting training. In my point of view drop and pick up of employee does not fall within this namely services. Moreover, supplies to employer to employee has specifically mentioned in Section and schedules, wherever, benefit is to be granted. So only those supplies including gifts, where specifically mentioned is available to employer. So, I am of the view that ITC is not available. Thanks – Reply By Anil Sood – The Reply = Friends let us have a look at the Apportionment & blocked credit:- 17. (1) Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his busin
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
i) rent-a-cab, life insurance and health insurance except where- (A) the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or (B) such inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply; and (ii) travel benefits extended to employees on vacation such as leave or home travel concession; Now, if we look at the definition, the credit of motor vehicle is inadmissible except in the case of buses owned by the Employer because the buses are not engaged for providing services of transportation of passengers. However, if the Employer hires buses from outside and makes payment to the owner of the buses towards transportation of employees, the Input tax credit, in my view is admissible because without transportation of employ
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =