No GST payable on Reimbursement of Expenses such as Salaries, Rent, Training, Staff Welfare Expenses by Maha Mumbai Metro: AAR [Read Order]

The Maharashtra Authority of Advance Ruling (AAR) ruled that no GST payable on reimbursement of expenses such as salaries, rent, training, staff welfare expenses by Maha Mumbai Metro.

The Applicant,  Maha Mumbai Metro (M3) Operation Corporation Ltd. is wholly owned subsidiary of Mumbai Metropolitan Region Development Authority (MMRDA) whose aim is to integrate the Operation and Maintenance of all Metro corridors under one authority with objectives to independently carry out business of Operation and Maintenance (O&M) related functions of all Metro lines in Mumbai Metropolitan Region, to carry out Planning, Identification, Development and Implementation of all Non-Fare Box Revenue measures, Execute Property development and construct or maintain or lease out various facilities in relation to rail transport system, to achieve the above objective, applicant is incurring various expenses such as Salary & Wages for employee, Contribution to provident Fund, Training expenses, Canteen expenses, Advertisement expenses, Manpower expenses etc. Currently, no revenue is generated by the applicant by incurring these expenses in relation to Operation and Maintenance activity since at present no such activities have started to be undertaken by the applicant. All the expenses incurred by the applicant are reimbursed by MMRDA at cost. No additional payment is done by MMRDA

The applicant has sought the advance ruling on the issue of whether GST is applicable on reimbursement of expenses such as salaries, rent, training, staff welfare expenses etc.

The coram of Rajiv Magoo and T.R.Ramnani he impugned pure services supplied by the applicant can be covered under clause 1, of the Twelfth Schedule above, pertaining to Articles 243W of the Constitution, “by way of any activity in relation to any function entrusted to a Municipality under article 243W of the Constitution”.

“We are of the opinion that the applicant is supplying pure services to a Government Entity in relation to any function entrusted to a Panchayat under article 243W of the Constitution and therefore, as per the provisions of Entry No. (3) Of Notification No. 12/2017-CT(R) dated 28.06.2017, mentioned above, the said amounts received by the applicant are not liable to tax,” the AAR said.

Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.