GST Not Applicable on Employee Commute Cost Recovery, AAR Rules

M/s. Renault Nissan Technology & Business Centre India Private Limited, operating as an SEZ–based support centre providing engineering, IT, and BPO services, arranged transportation facilities for its employees through third-party transport service providers. Employees were picked up from designated locations and dropped off at the office and back. The company recovered a nominal portion of transportation costs from employees through salary deductions, while the major cost was borne by the employer.

The facility was optional and formed part of the employment terms as a perquisite. The applicant sought clarity on whether such recovery amounts to a “supply” under GST and, if yes, the valuation mechanism.

Central Issue: Whether nominal amounts recovered from employees towards transportation facility constitute a taxable “supply” under Section 7 of the CGST Act, 2017, and if so, the value on which GST is payable?

Tribunal’s Decision: The authority held that the arrangement does not qualify as a “supply” under GST. It observed that transportation service is neither provided by the applicant on its own account nor is it in the course or furtherance of its core business. The facility is merely a welfare measure extended to employees and is optional in nature. Further, the nominal recovery from employees is only a partial cost-sharing mechanism, and no consideration accrues to the applicant.

Additionally, the transportation facility forms part of employee perquisites under the employment contract, which falls outside the scope of GST in terms of Schedule III read with CBIC Circular No. 172/04/2022-GST. Therefore, no GST is payable on such recoveries, and the question of valuation does not arise.

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