GST AAR ruling in the Columbia Asia judgment – needs reconsideration!
By: – pranav deshpande
Goods and Services Tax – GST
Dated:- 29-8-2018
Brace for more hiccups.
The AAR have given a ruling in the case of Columbia Asia Hospitals Pvt. Ltd. = 2018 (8) TMI 876 – AUTHORITY FOR ADVANCE RULINGS, KARNATAKA
Before we analyze the ruling, let us look at some facts:
Columbia Asia Hospitals Pvt Ltd (hereafter, referred to as "applicant") is a private company, rendering health care services. They are operating in 6 States, with 11 hospitals or units. They have 6 units in Karnataka alone. They have their corporate office in Karnataka. Accounting, administration and IT systems are maintained from this office, by employees ap
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per AAR).
Instead of becoming emotionally agitated by this ruling, which would doubtless have far reaching consequences, it may be useful to analyze certain definitions of 'employer' and 'employee'.
The fact is – 'employer' 'employee' and 'in the course of employment' are not defined under CGST Act.
But they are defined, elsewhere.
'Employer' is defined under section 2(1)(e) of Employees' Compensation Act and Section 2(e) of the Minimum Wages Act and in both these definitions, employer as a general entity, has a separate existence and location is not relevant.
Similarly, 'Employee' is defined under section 2(f) of the Employees' Provident Fund Act, 1952 and there too,
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9;salaries' under Income tax Act and TDS is deducted accordingly. To hold that he is also partly acting as a 'consultant' to the employer's branch offices would change the character of his income and other related obligations, as well.
Further, nowhere in the labour laws, is the employment location-based. Because if that logic is applied, even the MD or CEO of a company, who is technically the company's employee, would be regarded as a 'consultant' to other offices, in the performance of his executive duties.
I have the highest regard and respect for the august offices of the AAR and the judiciary. However, with all due respect, I believe that in light of the above, the ruling needs reconsideration.
Schol
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