Amount recovered from Employees towards Car Parking Charges to be deemed as ‘Supply of Service’: AAAR [Read Order]

employees - car parking charges - Supply of service - AAAR - Taxscan

The Uttar Pradesh Appellate Authority of Advance Ruling (AAAR) ruled that the Amount recovered from employees towards car parking charges to be deemed as “Supply of service”.

The appellant, Ion Trading India Private Limited is a wholly owned subsidiary of M/s ION Trading UK Limited and engaged in the business of software development which is exported to the overseas company.

The appellant entered into a rent agreement with M/s Shantiniketan Properties Private Limited for renting of office premises including certain number of free car parking spaces and certain number of parking spaces on payment of agreed rent per car parking space per month.

As the car parking spaces were not sufficient, and the employees are in need of more parking spaces, the appellant facilitates procurement of car parking spaces from the Building Authority and procures it on payment of agreed lease charges per car parking space per month.

The appellant has sought the advance ruling on the issues whether amount recovered from the employees towards car parking charges payable to Shantiniketan Properties Private Limited (building authorities), would be deemed as “Supply of service” by the applicant to its employees and whether the value of aforesaid supply would be NIL, being provided in the capacity of a Pure Agent. If valuation is not accepted as NIL, what would be the value of such supply.

The AAR refused to give the ruling on this issue as there was the absence of requisite documents.

The appellant being aggrieved by the AAR’s ruling filed the appeal before the AAAR.

The coram consisting of Amrita Soni and Ajay Dixit ruled that the amount recovered from the employees towards car parking charges payable to Shantiniketan Properties Private Limited (building authorities), would be deemed as “Supply of service” by the applicant to its employees.

The AAAR further ruled that the value of supply would be Nil, subject to the fulfillment of the conditions prescribed for the pure agent.

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