Case Details: In re: Kion India Pvt. Ltd. (2025) 29 Centax 357 (A.A.R. - GST - Mah.)
Judiciary and Counsel Details
- Shri D.P. Gojamgunde & Ms Priya Jadhav, Members
Facts of the Case
The applicant, a factory situated in a remote location outside the city limits where public transportation options are limited, arranges non-air-conditioned bus transportation services for its employees. To mitigate the cost, the applicant recovers a nominal amount from the employees’ salaries for utilising the transportation facility. This arrangement was not backed by any statutory obligation, and the transportation service was not provided as a perquisite to the employees but as a paid service.
The applicant approached the Maharashtra Authority for Advance Ruling (AAR) seeking clarification on whether the recovery of this nominal amount from employees for the transportation facility would be considered as a taxable supply under the Goods and Services Tax (GST) regime and whether the applicant could claim input tax credit (ITC) on the invoices issued by the transporter.
AAR Held
The Hon’ble Maharashtra AAR held that the recovery of a nominal amount from employees for providing transportation services indeed constitutes a supply of service under GST. The AAR clarified that the applicant’s action of recovering the nominal amount from employees for transportation services, even at a nominal value, is considered as a taxable transaction under GST.
The AAR noted that even though the service is provided for the employees’ convenience, it involves the recovery of consideration for a service that qualifies as taxable under the GST law. It was further observed that the recovery from employees is not a perquisite but a charge for the transportation service. Consequently, the AAR ruled that the applicant is not entitled to claim Input Tax Credit (ITC) on the GST charged by the transport service provider as the transportation service is for the employees’ personal convenience, not related to the business activity of the employer.
List of Cases Cited
- ION Trading India (P.) Ltd, In re — 2020 (32) G.S.T.L. 608 (A.A.R. – GST – U.P.) — Referred [Para 2.58]
