GST ITC Admissible On Bus Hired For Transportation Of Employees Having Capacity Of More Than 13 Passengers: Gujarat AAR

The applicant, M/s. Emcure Pharmaceuticals Limited, submitted that it provides a canteen and bus transportation facility to its employees. The canteen and bus transportation facility are part and parcel of the employment arrangement with the employees.

The applicant submitted that it 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 was entitled to make recoveries at subsidised rates for facilities provided by them at its factory.

According to the applicant, in order to provide the canteen and bus transportation facilities, it engaged third-party service providers, who in turn provide the said canteen and bus transportation facilities to the employee.Since the services are provided by the third-party service providers, the service providers are raising their invoices with applicable GST to M/s. Emcure. They recover a certain portion (i.e., subsidised amount-fixed amount deducted from salary on a monthly basis) from the employees towards the self-consumption of food provided in the canteen area.

The applicant sought an advance ruling on the issue of whether the recoveries made by the applicant from the employees for providing a canteen facility to its employees are taxable under the GST laws.

Yet another issue raised was whether the free-of-cost bus transport facilities provided by the applicant to its employees are taxable under the GST laws.

The AAR ruled that ITC on motor vehicles for transportation of persons having an approved seating capacity of more than 13 persons is not blocked credit vide Section 17(5) CGST Act. As a result, the hiring of buses with a seating capacity of more than 13 people does not fall under blocked credit as defined in Section 17 (5)(b)(i) of the CGST Act.

The Authority observed that GST, at the hands of M/s Emcure, is not leviable on the amount representing the employees' portion of canteen charges, which is collected by M/s Emcure and paid to the canteen service provider.

Applicant's Name: M/s. Emcure Pharmaceuticals Limited

Date: 12.04.2022

Advance Ruling No. GUJ/GAAR/R/2022/22

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