The Authority for Advance Ruling (AAR), Gujarat has held that Input Tax Credit (ITC) is available to an employer on the Goods and Services Tax (GST) borne by them for Non-AC Bus Transport Services provided to their employees by Transport Service Providers (TSPs) using buses with a capacity of more than 13 seats.
The ruling came in response to the application filed by M/s. Tata Autocomp Systems Ltd, a leading automotive parts manufacturer, seeking clarity on the tax implications of certain employee benefits provided by them.
The applicant had engaged TSPs to provide Transport Services to the employees. TSP means any person or agency that provides freight, goods or passenger transportation or related services.
The applicant, represented by Suyash Maheshwari, Vikash Agarwal and Manish Kumar Mishra contented that the transportation facility offered to employees was in the course of their employment and was provided exclusively for their convenience.
The service was limited to employees and the TSP operated the buses according to pre-approved routes set by the applicant. The employees were required to display their company-issued ID cards to avail the facility and the service was terminated once an employee ceased to work for the applicant company.
The AAR noted the absence of an identifiable supply in the transportation provision and hence ruled that it falls outside the scope of supply and does not constitute consideration under Section 7 of the Central Goods and Services Tax (CGST) Act, 2017.
Further, the Authority highlighted various rulings and circulars to support its decision that the transportation service provided to employees does not qualify as a supply liable for GST such as Tata Motors Ltd, Dr. William Schwabe (1) P Ltd, North Shore Technologies P Ltd, Ion Trading India P Ltd, and Circular No. 177/9/22-TRU.
In conclusion, the Authority comprising Milind Kavatkar, State Goods and Services Tax (SGST) Member and Amit Kumar Mishra, Central Goods and Services Tax (CGST) Member clarified that the employer, M/s. Tata AutoComp Systems Ltd. is eligible to claim ITC on the GST borne by it for Non-AC Bus Transport Services provided to employees by TSPs operating buses with a capacity of more than 13 seats.
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