GST on Conveyance provided to Employees

11 Jul, 2022 Adv Akella A S Prakasa Rao, B.E.(Hons), LLB
GST on Conveyance provided to Employees

As per Maharashtra Shops and Establishments Rule 13, an additional condition has been imposed in case of employing women during the night shift while setting up the modalities and it says that “To provide a safe and secure separate transportation facility for all the women workers working in the night shift from the workplace to the doorstep of their residence and vice-versa. The employer shall have all the details of the drivers, guards, and all such workers engaged by themselves or through any agency or contractor. Police verification of all such workers engaged for safe and secure transportation of women workers shall be mandatory.”

Section 25 of the Karnataka Shops and Commercial Establishments Act prohibits women from working at night. However, the IT and ITeS sectors were exempted in 2002.  Later, the Labour Department issued a notification allowing women to work during the night shifts also particularly in the IT/BT sector.

As per the Karnataka Shops and Commercial Establishment (Amendment) Act, 2020 (“Amendment Act”), a woman employee who is willing to work during night hours, may be allowed to work in a shop or commercial establishment during such night hours, subject to compliance with the following conditions:

Section 7, 8, 9, 10 and 11 of the Karnataka Shops and Commercial Establishment Act, 1961 (“S&E Act”) shall continue to apply to the women employees working during the night shift (Section 7 pertains to daily and weekly hours of work; Section 8 pertains to payment of overtime wages for overtime work; Section 9 discusses the intervals of rest that should be allowed to an employee; Section 10 pertain to spread-over of work and Section 11 pertains to the opening and closing hours of the establishment).

1.       Willingness of women employees to work during night hours shall be obtained in writing.

2.       Employment of women employees shall be on rotation basis.

3.       Adequate number of security guards shall be posted during such night shifts.

4.       Sufficient electricity, rest rooms, lockers, dispensary and washing facilities with adequate supply of water shall be provided separately for women employees.

5.       The establishment shall bear the cost of the creche facility obtained by such women employees from voluntary or other organizations.

6.       Establishment shall provide to and fro transportation facilities to such women employees from their residences to their workplace, free of cost and with adequate security. Further, with respect to such transportation facility, the employer should also ensure that:

·         Vehicle is equipped with GPS for tracking and monitoring purposes.

·         It has collected the bio data of each driver and it has conducted a background check on such drivers, whether on its own or through third-party service providers. Further, if such drivers are on the payroll of a third party service provider, the employer should ensure that the service provider has collected the bio-data of the drivers and have also conducted a background check on them.

·         The schedule of pick up and drop routes shall be decided by the supervisory office of the organization. Only in certain emergency situations, change in the routes to be taken/ drivers and their shifts shall be allowed with the prior knowledge of the supervisory officers/employees of the organization.

·         Contact details of the women employees (including telephone number, mobile number, email id, address) shall not be disclosed to unauthorized person.

·         Careful selection of the routes shall be done in a manner that no women employees are picked up first or dropped last. If women employees are being picked up first and dropped off last, security guards are to be provided in such vehicles.

·         To the extent possible, random checks of vehicle on various routes shall be conducted.

·         A control room/travel desk for monitoring the movement of the vehicles is established.

The establishment may also develop and adopt a mobile application which will allow the women employees to contact the organization through the application in times of emergencies. Further, the employer may also need to adhere to any additional compliance, as may be prescribed by the government. If an establishment fails to comply with the abovementioned provisions, it shall lead to the cancellation of its registration certificate.

Section 66(1)(b) of the Factories Act, 1948 states that no woman shall be required or allowed to work in any factory except between the hours of 6 a.m. and 7 p.m. However after much debate, the courts have upheld the right of women to work beyond these hours subject to the organizations making all safeguards in place including safe and secure conveyance for them. But unfortunately there is no universal law or statute binding this clause and the respective states have issued guidelines suiting their needs. Hence strictly speaking, there is no obligation under any law for the time being in force, but there is lot of emphasise that the women need to be provided with secure conveyance while working in night shifts. In the absence of any binding legislation it would be difficult for the companies to take shelter under such instructions and to avail ITC on the conveyance expenses. However discrimination anyways exists, when men use such facility or the facility is provided during the day shift. In all such cases, the companies should opt for conveyances of the capacity of more than 13 passengers in order to avail ITC on the said service. But in all other cases, it becomes difficult to legally defend the position. It is for the authorities to come out with clarity on these aspects, as GST being a pan India legislation and for availing the ITC on services mandated under law, a multi locational company cannot adopt different local legislations in order to claim the ITC and the discriminatory practices are definitely not in the spirit of ease of doing business.

On a separate note, when a company wants to buy the conveyance to be used for plying of their employees, whether ITC is eligible on the same can be a question for the industry. The authorities may take a stand that the expense is not in relation to the business on hand, but nevertheless if the situation is such that there is a mandate under any other law for the time being in force that the conveyance is to be provided by the company, then it will be easy to take defence on that ground. But in the case of SEZ units, the authorities are currently taking the view that the conveyance should be put to use only within the SEZ premises and cannot ply on roads. This appears to be strange that the very purpose of buying the bus for commute of the employees gets defeated, if the same is not allowed to ply on roads, but the same authorities allow the GST exemption if the service provider renders services using a conveyance with seating capacity of more than 13 seats. These anomalies need be addressed at the earliest so that it will help the trade.

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