The UP bench of the Appellate Authority of Advance Rulings (AAAR) in its recent ruling in the case of Ion Trading India Private Limited has held that the amount recovered from employees towards car parking charges, which are in turn paid to building authorities, is a ‘supply of service’ by the employer company towards its staff. However, it was also adjudged that as such services were rendered as a ‘pure agent’, their value would be nil and thus no GST is required to be paid.
This appellate order was given in the case of a Noida-based private company Ion Trading India Private Limited, which is a subsidiary of a UK company and engaged in the business of software development which is exported to the overseas company.
The appellant facilitates procurement of car parking spaces from the Building Authority and procures it on payment of agreed lease charges per car parking per month. The Appellant bears the part of the lease charges and the balance amount is equally recovered from all the employees using the parking spaces for four-wheeler parking or for two-wheeler parking.
The company submitted that the facilitation of parking spaces between its employees and the building authorities does not amount to supply of services as this activity is not in the course of furtherance of its business of software development.
The AAAR did not agree with this stand and held that activity in question is squarely falls under Schedule II i.e. Activities to be treated as supply of goods or supply of service’ of the CGST Act.
But it agreed that the company was not utilising the parking charges collected from employees for its own benefit and the entire sum was passed on to the building authority. Hence, it qualified as a pure agent and the value of services provided by it would be nil. In other words, there would be no GST sum to be collected from employees. However this is subject to fulfillment of conditions of being a pure agent as per Rule 33 of the CGST Rules,2017
The pandemic has resulted in a large number of employees (who do not work from home) using their own vehicles be it two or four-wheelers. This, in turn, results in the employer having to provide for parking space.
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Source : timesofindia.com
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