fiogf49gjkf0d
Provision of a car to an employee by the employer during the course of his employment and only because the employee is in service is covered by section 65B(44)(b) of the Finance Act, 1994 and will not amount to service.
Facts
The applicant desires to hire cars from car leasing companies and under the scheme those cars would be made available to such employees who are firstly continuing to be the employees and secondly who accept the option to have the car for their personal as well as official use and in lieu of this, the company was to charge the said employees the same amount which it would be paying to the car leasing company from which they hire the car. The question before the authority is whether the amount to be charged to its employees for the use of the vehicles is subject to service tax.
Held
The Authority noted that the service of “making available” a car to the employee is being rendered by the applicant. In this context, both the conditions of clause (b) of section 65B (44) are fulfilled. Firstly, it is in the course of the employment because the agreement between the applicant and employee clearly suggests that this will be during the course of his employment only. Second condition is also satisfied that it is only because the employee is in service and in that sense the service becomes in relation to his employment. Since both these conditions are fulfilled, it is held that the transaction will not amount to service.
