|
Case Title |
Ascendas Services (India) Pvt Ltd vs Appellate Authority |
|
Court |
Karnataka AAAR |
|
Honorable Judges |
Member D.P.Nagendra Kumar & Member M.S.Srikar |
|
Citation |
2020 (02) GSTPanacea 29 HC Karnataka KAR/AAAR-14-E/2019-20 |
|
Judgement Date |
14-February-2020 |
|
Council for Petitioner |
Prashanth Bhat Nitesh Kumar |
|
Council for Respondent |
NA |
|
Section |
52(2),100 |
|
In Favour of |
In Favour of Revenue |
The Karnataka Bench of Member D.P.Nagendra Kumar & Member M.S.Srikar has held that the bus pass is only a contract of carriage. A contract is not property, but only a promise supported by consideration. Thus, the bus pass is not an actionable claim.Therefore, bench do not agree with the claim of the Appellant that the bus pass is an actionable claim not liable to GST.
FACTS OF THE CASE
The Appellant is engaged in the business of operation and maintenance of International Tech Park which includes operation and maintenance of electrical systems at common areas, building and civil repairs, maintenance of lifts etc. In addition, the appellant also arranges for the transport of its staff and employees of the corporate clients in the Tech Park who are the tenants of the business park (herein after referred to as ‘commuters’).
For the purpose of arranging the transport facility, the Appellant has entered into a contract with Bangalore Metropolitan Transport Corporation (herein after referred to as ‘BMTC’) whereby BMTC allots 1 bus to the Appellant for every 50 passes purchased. The Appellant receives the following types of bus passes from BMTC for distribution:
Non AC regular BMTC bus pass; and
Combo bus pass which can be used for Non-AC and AC buses
BMTC does not charge GST for the non-AC bus passes since the same is exempt from GST vide Entry No. 15 of Notification No. 12/2017-CT(R) dated June28,2017. However, for Combo bus pass (i.e. which can be used for non-AC and AC buses), BMTC charges GST at 5% as per Entry No. 8(ii) of Notification No. 8/2017- IT (R) dated June 28, 2017.
The Appellant charges a separate fee of Rs. 300 per commuter as ‘facilitation fee’ for arranging the transport facility for the said commuters. In this connection the Appellant sought an advance ruling in respect of the following question:
- Whether the value of bus passes distributed by the applicant to the commuters is to be included in the value of facilitation charges as per section 15(2)of the CGST Act, 2017 and KGST Act, 2017?
- Whether the supply of service in the hands of the applicant could be classified as merely a supply of facilitation services between BMTC and the commuters?
The Karnataka Authority for Advance Ruling vide ruling No KAR ADRG NO 114/2019 dated 30-09-2019 held as follows:
- The value of the bus passes distributed by the applicant to the commuters and the facilitation charges is to be included in the value of services provided by the applicant
- Regarding the second question of “whether the supply of service in the hands of the applicant could be classified merely a supply of facilitation service between BMTC and the commuters “, the answer is in the “negative.
Aggrieved by the said ruling, the appellant has filed this appeal
COURT HELD
Considering the facts as recorded, held that the bus pass is only a contract of carriage. A contract is not property, but only a promise supported by consideration. Thus, the bus pass is not an actionable claim as defined under Transfer of Property Act. It is only an instrument accepted as consideration/part consideration while purchasing the service from the Appellant. Therefore, bench do not agree with the claim of the Appellant that the bus pass is an actionable claim not liable to GST. Bench agree with the ruling given by the lower Authority and hold that by virtue of Section 15 of the CGST Act, the value of the service supplied by the Appellants will include the value of the bus passes as well as the facilitation charges. Bench uphold the Advance Ruling No KAR/ADRG 114/2019 dated 30-09-2019 and dismiss the appeal filed by M/s Ascendas Services (India) (P.). Ltd. on allcounts.
ANALYSIS OF THE JUDGEMENT
It is amply clear that those instruments which satisfy the conditions of being accepted as consideration/part consideration against purchase of specified goods and the identities of the potential suppliers are indicated in the instruments are to be considered as ‘Vouchers’ for the purposes of GST.
Vouchers are neither money nor actionable claim. It is not a claim to a debt nor does it give a beneficial interest in any movable property to the bearer of the voucher. Similarly, in the instant case, the bus passes are purchased by the commuters on paying a value in money. The commuter produces the bus pass for purchasing the service of transportation.
The bus pass only give the commuter the right to travel. If the commuter does not use the bus pass within the duration for which it is valid or loses the bus pass, it becomes invalid and cannot be used to procure the service of transportation. The bus pass is only a contract of carriage. A contract is not property, but only a promise supported by consideration. Thus, the bus pass is not an actionable claim as defined under Transfer of Property Act. It is only an instrument accepted as consideration/part consideration while purchasing the service from the Appellant. Therefore, bench do not agree with the claim of the Appellant that the bus pass is an actionable claim not liable to GST. Bench agree with the ruling given by the lower Authority and hold that by virtue of Section 15 of the CGST Act, the value of the service supplied by the Appellants will include the value of the bus passes as well as the facilitation charges.
Download PDF:
Ascendas Services (India) Pvt Ltd
For Reference Visit:
AAAR Karnataka
Read Another Case Law:
GST Case Law