Goods and providers tax (GST) is triggered every time there’s any such provide. However, as such providers have been rendered as a ‘pure agent’, their value could be nil.
This appellate order was given within the case of a Noida-based personal firm Ion Trading, which is a subsidiary of a UK firm. The firm submitted that the facilitation of parking areas between its staff and the constructing authorities doesn’t quantity to provide of providers as this exercise isn’t in the middle of furtherance of its enterprise of software growth.
The AAAR didn’t agree with this stand. But it agreed that the corporate was not utilising the parking costs collected from staff for its personal profit and your complete sum was handed on to the constructing authority. Hence, it certified as a pure agent and the value of providers supplied by it could be nil. In different phrases, there could be no GST sum to be collected from staff.
The pandemic has resulted in a lot of staff (who don’t work from residence) utilizing their very own autos — be it two- or 4-wheelers. This, in flip, ends in the employer having to present for parking area.
In this context, this order given by the UP bench of the AAAR is pertinent. Sunil Gabhawalla, founding father of a CA agency, mentioned, “This ruling is in contradiction to an advance ruling in the case of Posco India, where the health insurance expenses for parents recovered from employees was not held to be a supply of service.”
“However, as the AAAR in this case has held that the act of collecting parking fees was performed in its capacity of a pure agent, the ruling may be well-received by the industry, as most of the recoveries from employees are at cost,” he provides.
It ought to be famous that advance rulings solely have a persuasive affect throughout evaluation of comparable circumstances and don’t set a judicial precedent.