Parking charges recovered from employees payable to building authorities are Supply of Service

Amount recovered from employees towards car parking charge payable to building authorities would be deemed as Supply of Service

Appellate Authority for Advance Ruling for GST
Uttar Pradesh

Brief Facts of the Case

1) M/s ION Trading India Private limited, Building No. 2, Infospace, 4-6th Floor, Block-B, Plot-2, Sector-62, Noida, Uttar Pradesh (here in after called the appellant) is a registered assessee under GST having GSTN: 09AAECA4325R 1Z9.

2). The appellant is a private limited company, wholly owned subsidiary of M/s ION Trading UK Limited and engaged in the business of software development which is exported to the overseas company. The appellant entered into a rent agreement with M/ s Shantiniketan Properties Private Limited (Building Authority in short) for renting of office premises including certain number of free car parking spaces and certain number of parking spaces on payment of agreed rent per car parking space per month. As the aforesaid car parking spaces were not sufficient, and the employees are in need of more parking spaces, the appellant facilitates procurement of car parking spaces from the Building Authority and procures it on payment of agreed lease charges per car parking space per month.

3). The appellant bears part of the lease charges and the balance amount is equally recovered from all the employees using the parking spaces depending cm whether the employee uses the parking space for four-wheeler parking or for two-wheeler parking. The appellant does not claim input tax credit of the lease charges paid to the Building Authority. These lease charges are paid in advance on monthly basis along with Goods and Services Tax leviable thereon.

4). Accordingly, the Appellant has submitted application for Advance Ruling dated 08.07.2019 and sought Advance Ruling on the following issues: –

i. Whether amount recovered from the employees towards car parking charges payable to Shantiniketan Properties Private Limited (building authorities), would be deemed as “Supply of service” by the applicant to its employees?

ii. If the first question is answered in affirmative, whether the value of aforesaid supply would be NIL, being provided in the capacity of a “Pure Agent”? If valuation is not accepted as NIL, what would be the value of such supply?

iii. If GST is payable on the such amount recovered from the employees, whether the GST paid by the applicant to building authorities towards car parking charges would be admissible as input tax credit against supply of car parking services to employees?

5). The Authority for Advance Ruling, vide Order No. 42 dated 27.09.2019 ruled that:

“In the absence of requisite documents, as discussed in above paras, no ruling can be given on the questions asked by the applicant.”

6). Being aggrieved with the aforesaid Order No. 42 dated 27.09.2019, the appellant filed this appeal application before us.

SOME OF DISCUSSION AND FINDING

9) We have gone through the submissions made by the appellant and examined the detailed explanation submitted by them. We observed that the appeal is mainly based upon the following points viz:-

a. The facilitation of parking spaces between its employees and Building Authority does not amount to supply of services as per the applicable provisions of CGST Act, 201 7, as the activity of facilitation of parking space is not in the course or furtherance of business of software development.

b. If the same is considered as supply then the value of such supply would be nil as the same is being undertaken by the appellant as pure agent.

c. The input taxes paid/ payable by the appellant, for the parking space, should be admissible as input tax credit to the appellant, if the parking facilitation services are deemed as taxable supply of services leviable to GST.

10). We observe that the contention of the appellant is that while facilitating the car parking space for employees whether the amount recovered from the employees towards car parking charges is a “Supply of service” by the applicant to its employees.

11). We observe that Section 7( 1) of the CGST Act 201 7 defines the term “Supply” as:

“7 (1) For the purpose of this Act, the expression “supply” includes-

a) all farms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;

b) import of services for a consideration whether or not in the course of furtherance of business;

c) the activities specified in Schedule I, made or agreed to be made without a consideration and

d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. “

The Question and Ruling as follows :

Question i.:- Whether amount recovered from the employees towards car parking charge payable to Shantiniketan Properties Private Limited (building authorities), would be deemed as “Supply of service” by the applicant to its employees?

Answer: – The question is answered in the affirmative.

Question ii. :- If the first question is answered in affirmative, whether the value of aforesaid supply would be NIL, being provided in the capacity of a “Pure Agent”? If the valuation is not accepted as NIL, what would be the value. of such supply?

Answer:- Value of the supply would be nil, subject to the fulfillment of the conditions prescribed for a pure agent by the appellant.

Question iii. :- If GST is payable on such amount recovered from the employees, whether the GST paid by the applicant to building authorities towards car parking charges would be admissible as an input tax credit against the supply of car parking services to employees?

Answer:- As the second question is answered in negative hence The question becomes redundant.