CA Bimal Jain
J.P. Morgan Services India Private Ltd, Mumbai (“the Applicant”) floated the scheme as an employment retainment programme, under which, the Applicant was to provide cars, hired from car leasing companies, to the employees who are, firstly, continuing to be the employees of the Applicant, and, secondly, who accept the option to have the car for their personal as well as official use. In lieu of this, the Applicant was to charge the employees same amount, which the Applicant would be paying to the car leasing company. Now, the question posed to the Advance Ruling Authority was whether the amount charged by the Applicant to its employees for use of the vehicles is subject to Service tax.
The Hon’ble Authority for Advance Rulings held that in the instant case, the Applicant charge the amount to its employees for use of the vehicles, which is equivalent to the rent amount paid to the car leasing company i.e. no extra amount is charged from employee. Further, there is also an option given to the employee to ultimately purchase the car at the end of his employment at the written down value. There can be no dispute that the service of “making available” a car to the employees is being rendered by the Applicant, which fulfills both the conditions prescribed under Section 65B(44)(b) of the Finance Act, i.e. the services are rendered in the course of employment and in relation to his employment. Thus, the same will not amount to ‘service’.
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