Introduction-

An appeal filed by Faiveley Transport Rail Technologies India Private Limited (Appellant) against an Advance Ruling (AAR) issued by the Tamilnadu State Authority for Advance Ruling. The AAR ruled that GST applies to the car lease facility extended to the Appellant's employees.

Issue:

Whether car lease provided to employees as a perquisite under the employment contract is exempt from GST.

Appellant's Contention:

• Car lease is a perquisite under Income Tax Act.
• Perquisites provided under a contractual agreement are exempt from GST (referring to CBIC Circular No. 172/04/2022-GST).
• Salary, including perquisites, is covered under Entry 1 of Schedule III of CGST Act (not a supply).
• Car lease policy is part of the overall Cost-to-Company (CTC) and not a separate cost.

AAR's Decision: GST applies because:

• The entire lease premium is recovered from employees.
• The appellant provides the service on their own account.
• Entry 1 of Schedule III applies to services rendered by employees, not vice versa.

Appeal Hearing:

Appellant reiterated their arguments and submitted additional documents:

• Car Lease Policy
• Employee Form 16 (partially redacted)

Appellant argued that the value of the perquisite (mentioned in Form 12BA) is the only taxable element under GST, not the entire lease premium.

Analysis and Decision:

• Entry 1 of Schedule III exempts services rendered by employees, not those provided by employers.
• CBIC Circular clarifies that perquisites under a contractual agreement are exempt when provided "in lieu of services" by the employee.
• The appellant did not provide copies of employment contracts to support this claim.
• The value mentioned in Form 12BA reflects the actual benefit to the employee (the perquisite).
• Since the appellant recovers the entire lease premium, it's not a true perquisite but a service with consideration.
• The concept of "perquisite" under Income Tax differs from GST's concept of "supply."

Conclusion:

The appeal is dismissed. The car lease facility, where the full cost is recovered from employees, is a taxable supply under GST. Only the actual value of the perquisite mentioned in the employee's tax documents might be exempt.

GST Case Law Faiveley Transport Rail Technologies India Private Limited

Citation-2024 TAXONATION 1720 (TAMILNADU-AAR)

CLICK HERE TO READ FULL CASE LAW/DOWNLOAD FROM ABOVE GIVEN PDF OPTION

OR 

SUBSCRIBE GST E-LIBRARY (INDIA'S HIGHEST GST CASE LAW DATA)

FOR MORE UPDATE ON GST/ IT JOIN OUR FREE WHATSAPP GROUP BY CLICKING ON THIS LINK https://chat.whatsapp.com/C8VB6F6VHme3A061UDQKhj