GST not leviable on Employer for Free Bus Transportation provided to Employees: AAR [Read Order]

The Authority for Advance Rulings (AAR) Gujarat has held that GST is not leviable on the Company for providing free transportation facilities to the employees.

The applicant, M/s. Emcure submits 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 facility provided by them at its factory.

The applicant sought for a clarification regarding the applicability of GST in respect of employee recovery towards bus transportation facility and whether the Applicant would be exempted under the Sl. No. 15 of Notification No. 12/2017 – Central Tax (Rate) dated 28 June 2017?

The applicant submitted that its employees are transported from one location to another against certain amount. Therefore, the said buses in question used for employee transportation would be covered under the definition of contract carriage. M/s. Emcure submits that as per Sl. No. 15 (b) of the Exemption Notification, the Non-AC buses being a Non-AC contract carriage would be covered under the exemption from GST.

State Member Atul Mehta and Central Member Arun Richard found that M/s. Emcure has arranged free of cost transportation facility to its employees in Non-AC buses, which is provided by third party vendor, as a part of its HR policy and this facility is as per employment arrangement with its employees. We are not inclined to accord these activities provided by M/s Encure to its employees to be an activities made in the course or furtherance of business to deem it a Supply by M/s. Emcure to its employees.

Concluding the order, the bench held that “When enquired during Virtual hearing, Shri Santosh Tapade informed that bus hired for transportation of employees has capacity more than thirteen passengers. We note that ITC on motor vehicle for transportation of persons having approved seating capacity of more than 13 persons is not blocked credit vide Section 17(5) CGST Act. Thereby, hiring of bus of approved seating capacity of more than 13 persons do not falls under blocked credit as provided under Section 17 (5)(b)(i) CGST Act.”

To Read the full text of the Order CLICK HERE

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