Allowed

GUJ/GAAAR/APPEAL/2024/09dt. 30.12.2024 of The Assistant Commissioner, Cgst, Ahmedabad North (M/s. Emcure Pharmaceuticals Ltd)

GST AAAR30 Dec 2024GUJ/GAAAR/APPEAL/2024/09dt. 30.12.2024

Case brief

AI extract

What is this about?

The Gujarat Authority for Advance Ruling granted exemption from GST on free bus and transport facilities provided by the respondent to employees. The Commissioner appealed, challenging the exemption based on previous rulings. The authority upheld the view that services provided free of cost to employees under a contractual employment agreement are not liable to GST, and motorcycles with over 13 se

What did the court decide?

The advance ruling dated 12.4.2022 granting exemption from GST on free bus transportation facility and ruling on motorcycles with over 13 seats was affirmed.

GUJ/GAAAR/APPEAL/2024/09dt. 30.12.2024 of The… — Writ and Judicial Review | GST AAAR (2024)

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(;t.r.tAlrAl'APP]it,t,,'t'E A t.l'l'IIOltI'l'Y 1,-oli Al)vANCE lll.rLIN(; (;ool)s ANI) sllllvlcEs^'l'Ax ..Y, ,NATroNrTax I)/5, IIA.IYA KAI{ I]IIAVAN, ASIIITAM I{OAI), ".3 fu]ABKET ,\tIMEr)ABAI) 3ll0 009.

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A I)VANC I i I{ ULIN(i(APPI :n L ) NO. GU.TGAAAIVA^L' l' lt' LLI^{2024I 09} (lN Al'Pl.f(ln l lON NO. Advancc l{ulin.q/S(lS'l &(l(iS'172022/A lt/()(r)

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1;n1gJo .12-.2021

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Namc and addlcss ol' thc A^ppclla n t appcllant 'l'hc Assistant Commi ssioncr, CGS'l', Ahrncdabad Nortl.r Commi ssioncratc, 2nd Irloor,^(]okuldhan.r Arcadc, SarkhcjSanand I{oad. Ahrncdabad-3 822 1 0. llcsrrondcnt M/s. lincurc I'harmaccuticals Ltd., SM-l4. 1-5 and 1(r/1, GII)C Sanand Industrial llstatc, 'l'aluka []ol and Charal, Sanancl, Ahrncdabad,^(iujarat 382 I 10. (;S'l lN o 1'thc rcspondcnt 24A.AACt;.457 4C17.1 J Lrrisdiction Ol'11cc Ccntcr Comrn issioncratc : Alrmcdabacl NorLh Division-lll - SANAND, I{arr Advancc Iluling No. and Gti J/Gn A I{/lU 2022 I 22 <latc<l I 2.4.2022. l)atc I)atc o1'appcal 20.05.2022 I)utc ol'I)crsonal I lcaring \s 1)2024 I)r'cscr-rt firr thc appcllant Nonc lbr thc appcllant. Sl.rri IIarsh Adhyalu, Aulhori;zsd S gll:lto 1'' lbr thc rcsporrdcnl.

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At tlrc or-rtsct wc would likc to makc it clcar that thc plovisiorrs ol' tl'rc Ccntral^(loods and Scrviccs^'l'ax Act, 2011 and (iujarat (ioods and Srlviccs^'l'ax Act, 20 I 7 (hcrcinaftcr rclcn'cd to as thc 'CGS'I' Ac1, 20 l7' and thc '(](]S'l' LcL,2017') arc pari materia and havc thc samc provisions in likc nrattcr and dillcr Iiorn cach othcr only on a lcw spccilic provisions.^'l'hcrclorc, lunlcss a lrcntion is particularly madc to such dissimilal provisions, a rclcrcncc Lo thc CGS'l' Act, 2017 would also rncan rcl'crcncc to thc corrcspondirrg similar provisions in thc GGS l Act, 201 7.

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l. l l'rc prcscnt appcal has bccn lllcd undcl Scction 100 ol'thc CCS I Act, 'I HCRr l0l7 and thc^(l(iSl Act, 2017 by l'hc Assistant Comnrissior.rcr. (l Ahrncdabad North Comrnissionclatc (hcrcinallcr rclcrrcd to as Ap against thc Advancc Ituling No. G[IJ/GAAI{/1112022122 dalccl 12.4.20 + l):l t6. ,.it

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appcal is lllcd r r tcn.ns ol'thc autl.rorization undcr tlLrlc 106(3)(a) o1'thc CCS'l' I{ulcs. 201 7.

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3 . Ilricl y,, thc lac1s arc cnumcratcd bclow 1br casc oi'rcl'crcncc:

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.^'l'hc cspondcnt IM/s. iirircurc l]harmaccuticaLs Ltdl, providcs cantc rn & bus transporfation lacility to its crnployccs as a part and parcc of thc agrccmcnt with thc employccs; that it is also bascd on thcir llL policy;

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thc cr rrtccn I'acility is providcd at a subsidizcd ratc;

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lransl ()rtation Iacility is providcd with no cost to cmployccs;

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. that 1rc bus uscd arc non airconditioncd, having scating capacit.v- ctl' morc th:rn l3 scats;

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r cantr- rn thcility is providcd in lcrms ol'scction 46 o1'thc lractorics Act, )4ti

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1n vi, rv ol thc lirrcgoir-rg lacts, thc appcllant had sought^Advancc

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Ii.uling on thc b -'low mcntioncd qucstion

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\lr.rl., tli.,.r!(r.. r!. r l,v rhr.\ptli.!.1 11,!r Irr...rflo.r. ir,r f:!\tiir:: r r.c:r 1.,!rL,it tL, rl<sup>(r].lo(r' rf. rr\rbl. urtrl.r 1l(^{r iS} l lN(\l

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\rr.Llj.f lir. 1,.( ol .L,s1 )L:. irrr,:t.rl lrt:lrrrr' t:.\riJ,l l\ :h. \tf r..1rrr 1,, 1' ,:r|1,!r.s s Ixr]blc Lrnn.r:11r^1jS I :.r^(l

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.\ lihoLr pr!'tudac.. clro il CST ls ;ifpll.ible :r rcspcct oi'.inPkyc. r.co\cr) .^\i(1. bu: rrrrrstonlnii)r ll'ciIIl- ul)cr|ct ll.^{pplic,rrrl\roLrldhc} crtrrptJ^ttrrdcr

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rr. 51. !r l5 oi \orili.iliu \o. ll l0ll (cnrrnl T.i\ (R.tr.) dulcJ l3.lLrir. :0lr:' \l:(r'0 rr.iIrr..r.(l:r,.,Jrn$hL,r,, Ih(.|t)lrlnr:il,thrl';.Lr!.rl frirl^r,, . .r.i,r','rr:,r(,(.:i(rr.r)r,'1^{r!(I!rr\r.J.,r} l.Jn,,L Sr, ia1,:^{( (:S} L.r' .' rli. rj..'r. .i..,. r.'i.ttL,r) l,r li:rth.rrn.. ol l,tsin(s\l ll^{1J. Nlnrl,l} tic r ttr^hr

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..rir,t] r.r tirt porlr,,r rt .on r.rrr.l\ rh. \tflr..,:rl'

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Cons rclucnt to hcaring M/s. Iimcrlrc^{Ph artn acculicals} Ltc.l., thc (iujarat Autho ity 1i>r Advancc I{uling IGAAI{], r:ccordcd thc lollor,ving lindings vrz

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. that I l/s. llmcurc an'angcd a cantccn scrvicc providcr' I CSI']; o that I art ol thc cantccn chargcs is bornc by M/s. llmcurc whcrcas thc rt rrining palt is bornc by its crnployccs;

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. thc ' Lnployccs portion of cantccn chargcs is collcctcd by M/s lir.r.rcr rc & paid to thc^(lSl'];

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. M/s. l;nrcurc has arrangcd licc o[' cost trilnsportation Iacilitl'' to its cr11pl )'ccs in non-AC br-rscs r,vhich is^{providcdby third partyvcndor'} zrs pa t ol' its I llt policy & this tacility^{is as pcr their agt'ccrncnt rvith} thc c r ployccs;

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. CAA l{ is not inclincd to hold thc aclivitics providcd by M/s. l'.rncr rc to i1s cmployccs to bc^{activitics maclcin thc cottrsc ol'} llrth :rancc ol busincss to dccm it as^'supply'

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. that t rc proviso to scction 17(5)(bxiii) is not conncclcd^{1o thissr-rb-} clau:. -' ol'scction l7(5)(b)(i) & cannot^{bc rcad into it;}

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l']il!. : oI t'r

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that l'l'C on rrotor vchiclcs lilr transportalion ol' pcrsons having approvcd scating capacity ol'I.nolc tl'ran 13 pcrsons is not blockccl r"rndcr scclion l7(5) olthc CGS't'Act, 2017.

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'l'hc GAAII, vidc thc impugncd ruling datcd 12.4.2022, hcld as

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lbllows

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I^(jSl. .ir th. hin(I. ol -.l s l-nrcLrrc. is Dor lc\ rll)lc on lhc' rnrount r('frcscntlfl! {hL' curplo|c.': porrion oI c;intc.'rt r_hnr!c. !hich i' c.,l].'cttcl lrr \1 s t:rDcur'c Jn.i f.rid^{1(,Ihc C.rnrc.n :crvrctpr'or iricr}

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-l^(;\L rt rhc harrLl.^,,1 \l^{</sup> lrrrr(ur.. r. not^{lcir.rhltor) li!.htr.Ir'irr I </sup> I , r ) r I . r ( i ' rr}}

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I.,ei)rtr pror Ltl.'rl L' LI\ olllo.c.

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j. llC on CSI-t)rr(l ('r cnr)lc(r) tluilitr L: hl,,c|'rd.r..lil trn.lcr S((lron Il r))(t,rrrl

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( (lST.,.r ,ir)(l irx(lrnissrt,l. r(' \l \ l-n)crrc.

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.1. llL orr CSI paitl orr Irrrlg ol Uus. hlrrn! .rpprorcd s.-rting .lIr!Ll\ L,l uro'r rlrall 1i 1,.r.i,rr' rrrc,i ll,r rrr|\lnr11a!orr,,l pr!:(n!('r,. i! r(Ltris\rl)1.

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I. Aggricvcd by thc albrcsaid advancc ruling, thc appcllant fltcvcnucl

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is bclbrc us, raising thc lollowing contcntions, vz

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a that GAAI{ crroncoLrsly grantcd bcncllt ol'cxcmption of'(iS'l' on licc bus transporl providcd by M/s. l'.mcurc;

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a that on onc hand^(iAAIi hcld that^(iS'l' is not lcviablc on limcurc on ll'cc bus transpo(ation whilc on thc othcr hand it was hcld that I'l'C on (iS'l'paid on hiring bLrs, is admissiblc;

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that in tcrrxs ol'scction l6(2)(c), ibid, I'l'C is r.rot cntitlccl Lrnlcss thc tax clrargccl ir-r rcspcct ol'such supply has actually bccn paicl:

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I'l'(l is admissitrlc only u,hcn^(lS I' at appropriatc ratc is^paid by' \4/s. I;nrcurc to third party scrvicc proviclcrs;

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a that sincc thc rcspondcnt docs Irot rccovcr arty alrount liorrt^its cnrployccs lor br.rs transpoflation, thcrc is no crr-rploycr-cnlploycc rclationship;

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a that thc ponion of thc ruling which statcs that GS'l'a1 thc hands ol'M/s. limcurc is not lcviablc on Iicc bus lranspoflation lacility providcd to its crnpl oyccs, is crroncous.

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['hc rcspondcnt has also Illcd his cross ob.icction, whcrcin hc^has

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raiscd thc Iollowing avcrrrcr.rts vL

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a rulinq \/as sor.rght as to rvhcthcr ficc ol'cost bus tt artsl-rot'tat ion ltrcilitl. ploviclcd by I:n-rcurc to its cnrployccs is taxablc; that Iinrculc had rcccivccl thc sclviccs liorn third party scrvicc proviclcls on which^(iS'l' was lcvicd;

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a that thc ruling nowhcrc spccifics^(iS'l' excmption lor bus transportcr who is thc third party scrvicc plovidcr;

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a that l')ncurc as an applicant cannot scck ruling orr bchalf of othcls ic third pany bus transportcr scrvicc plovidcr;

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a that GAAAI{ has alrcady hcld that rccovcry fi-or.n cmploycc would not tantan-x)unt to supply;

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a that thc arrang cnrcr.rt ol'll-cc bus transpol'tation lacility to crnplo-r-ccs thc lcspondcnl, Iicc ol'cost would not anrolrnl to sr-rpplv Lrndcr^(jS

l'ir '{'.

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I'crsc tal hcaring in tl.rc tnattcr was hcld on^{I 5.10.2024, whcrcirr} nonc appcarcd ibr thc l(cvcnuc. I lowcvcr, Shri^{I Iarsh Adhyaru,Authorizccl} Signatoly app. rrccl on bchall' o[ thc rcspondcnl. llc^also hled^{a writtcn} subrrission rais :rg thc lilllowing grounds:

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Rcvicw ( )rdcr No. 612022-23 datcd 19.5.2022 is mainly lbr thc^(lS'l on bLrs tran: )ort.ition llcility proviclcd by thc rcsponclcnt kr thc crttployccs & thc s1 cilic pura ol-thc gloLrrrcls ol' appcal rtrctttiotr that thc^Izrcilit-"' pruviclcc b1' tl'rc rcspondct-rt to thc crlplol'cc is ll cc Itcrrcc, thc scrt'icc providcr ir.ill bc cxcntptcd lbnr^(iS'l' rvhich sccnrs to bc irtcorrcct intcrprctr Lion;

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r^'l'ha[ thc had not sought advancc ruling lbr GS'l' cxcmption by thc scrvicc p ovidcls cngagcd in bus transportation ol- thc cmployccs,

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r that thc s.lrvicc providcrs lcvy^(lS'l';

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. that this .rcility is providcd Ircc ol'cost;

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that thc r clvancc ruling is only to thc cxtcnt ol'Icvy ol'GS'l' by l'inrcr-rrc in this c:, :c not lirr lcvy ol GS'l' by thc scrvicc providcrs;

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. that as r, cipicrrt ol'thc scrviccs irom third party lilr bus transportation. (lS'l ha bccn chalgccl by thc scrvicc proviclcr ancl paicl by thc rcsponclt rL, lbl rvhich thcy had not sor-rglrl cxcn.tption o1'GS'l'.

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I.'t\l)l(;s

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Wc l,rvc carclully gonc through and consiclcrcd thc appcal papcrs. rvrittcn submis rions lllcd by thc appcllant, submissions rradc at thc tinrc ol' pcrsonal lrcarii :, thc Advancc Il.uling givcn by thc GAAI( and othcr matcrials availablc on rc old.

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'l'l.ris r dcpartrncntal appcal whcrcin thc main issuc raiscd is that thc in thc inrpuqnt I ruling at para l5 (2) that^(lS'l' at thc hancls ol'Nl/s. l:nrcurc is not lcviablc o ll'cc bus transportation lircility proviclccl to its crnploycc is crroncoLrs & ar rbigr-ror"rs.^'l'hc dcpanrrrcntal appcal has lr-rrtl-rcr avcrrcd that orr onc hand thc⁽ \AIt hcld that^(lS'l' at thc hand ol M/s. llnrcurc is not lcviablc on licc bus tra rsportation & on thc othcr hand hcld that l'l'C on GS'l'paicl on hiling ol' bus rs adn.rissiblc.^'l'hc ncxt ground is that I'l'C would only bc adnrissiblc to I/s. Ilmculc whcn GS'l' at thc appropriatc ratc is paid by thcnr to third party s rvicc providcrs.

¶70

I l. 'l'hc lcpartrncntal appcal thcrcalicr gocs or-r to slatc that sincc thc rcsponclcrrt clot^r r-rot rccovcr anv rirroLurt lionr its cnrpJoyccs lirr provicling licc bus lransportar ,rn lacility thcrc is no cr.nploycr-crnploycc rclationsl-rip: th t rcspondcnt is I .rblc to pay^(iS'l to thc third party scrvicc providcrs on^I ()l

¶71

. --,,..9: ;9

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transportation lacility providcd by Mls., lrmcurc to its crnployccs; lhat to subslantiatc this avcrmcnt thcy havc rclicd on thc prcss rclcasc issucd by thc Ministlv ol'I:inancc datcd 10.07.2017; that il'thc scn,iccs arc providccl lrcc ol' chargc to all tl-rc cn-rployccs by thc cmploycr [hcn thc sanrc u,ill not bc subjcctcd to^(iS'l' providcd appropriatc^(lS'l' was paid whcn procurcd by thc crnploycr.

¶74

On going through thc impugncd ruling, wc find that thc rcsponclcnt has arrangcd ll'cc ol cost transpoflation lacility to its cmployccs in non -A(l bus, which is providcd by a third party vcndor, as a part ol' its I IR" policy and as pcr cmploymcnt agrccmcnt.^'I'hcsc l-acts arc no1 in clisputc.^'l'his issLrc stands clalillcd by thc clarilication issuccl vidc circular rro. I7214/2011-(iSI datccl 6.7.2022, thc rclcvant portion ol which is cxtractcd bclow lbr casc olLrndclstancling

¶75

I'crqrrisilespruritlcdhrtmplorcrlo ll '	rcrnrplorrcsirsprr^(ontracturlirgr(rnrrlnt
\,hcthcrrariousp,:rcluisitcs prcvidctl bylhe emplol,ertoits cmpkrcr:s irr tcrnrsrri'	l. SchtdLrlcllltt',thc^(CiST.\etProriclcs lhal^"srrriecsLr-r,,crrr1.,lovcctolhc ctlrllll)verrntltscr',ttrscol)rirrrcliLli,)n
cor}lraeturlitqrccntcntcntL-rtd intobct*crnthccnrplovtrand thgr,mplo!ccarc liablclor GST'/	t.r lristnrl)lrr\nldnl,rillr'lu(1,.' r'onsitlcrcdlrsstrpplrtrlLrrirrisrrr jdr\iccs.tud hrnec(iSTisrrLrtapplicuhlt trnrcrritc.ircntltruJL1\cnrIlr).Lt,.] l:rpl,.rrcr'l.r,,ritlecllhcvrrrcrrrlher'irLrsr (rl orinrclrili,rnti,c!nlllo\rr.ll(. I .\nr

¶76

t3 'l'hus, thc pcrquisitc of providing lrcc bus transportation ntffii lcsponclcnt to thcir cmploycc in tcrms ol'contraclual agrccrncnt cntcrc t bctrvccn thc lcspondcnt and thcit' cmploycc arc in licu ol'tl'rc scrviccs pro

Vr\

I)asc 5 r

by crnplocc to ilrc cmploycr in rclation to^{his cmploymcnt and will not bc} sr-rbjcctccl to^(lS I whcn thc samc arc^{providcd in tcrnrsol'thccontract bctlvccn} thc crnplovcr il^(l cmploycc. Wc thcrclorc^{conctlrwith thc vicrv ol'tlrc (lAAIt} in so lirr as it Ir lds Lhat N4./s.^{lir.t.tcr-tt'c} lrcspondcntl^{is not liablc to pay OS'lon} licc bus transpr rtation lacility providcd^{to its crnployccs.}

¶81

'l'l r scrvicc providcr of transpoflation scl'vicc to M/. lirncr-rrc. is discharging Gl I' which is conllrmcd by thc^{rcspondcnt cvcn in his wlittcn} sr"rbrrission. I rc rcspondcnt to substantiatc^{this has also attachcci lcu (iS l'} hil ls ol- inclcpcr icnt scrvicc providcr' lbr rcl-crcncc.

¶82

Ls. \ also ct:rrtcLtr with thc linding^ar.rcl rr-rling ol'thc^{(lAAIl, r'i hicir} lras hcld that r lC on trotor vchiclc {br transportation ol'^{pcrstltrslrarirlu} approvcd scati rg capacity o1'^t.n orc than l3^{pcrsons, not bcing blocl<cclrrr's} I7(5)(b)(i), ibi, , can bc availcd by thc rcspondcnt.

¶83

Ir vicw o{'thc abovc lrndings, wc rcjcct thc dcpartn-rcrrta|^appcai lllccl by^'l'l -' Assistant Commissioncr, CGS'l', Ahmcdabad^Nolth (lonrnrissioncl tc agair.tsl Aclvancc lluling No. (ltiJ/(lAn R./l{/2022/21 claLcd 12.4.1022 ol'tl '(iLrjarat ALrthority lbr Advancc ItLrling.

¶84

1'4,
( llrr.jcer'' opno ) ;'J
t.
Mcnrbcr (S(;S'1.)
Ahrlcclr .rad.rad
.12.20 I
<y

¶85

I) Iacc: Ahrlcclr .rad.rad I)atc3o .12.20 I

¶86

(li V Siva N:rg:t Kurrutril Mcrnber ((l(;S'l )

¶87

l'ir!.6^(\l 6

GUJ/GAAAR/APPEAL/2024/09dt. 30.12.2024 of The Assistant Commissioner, Cgst, Ahmedabad North (M/s. Emcure Pharmaceuticals Ltd)

Case brief

What is this about?

What did the court decide?

GUJ/GAAAR/APPEAL/2024/09dt. 30.12.2024 of The Assistant Commissioner, Cgst, Ahmedabad North (M/s. Emcure Pharmaceuticals Ltd)

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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