MUMBAI: The Maharashtra bench of the GST Authority for Advance Rulings (AAR) has held that recovery of an amount towards top-up of medical insurance and parental insurance premium from employees is not a supply and hence not subject to goods and services tax (GST). The AAR held that Tata Power, which had sought this ruling, is not rendering any service of health insurance to its employees or their parents and there is no supply of insurance services. Hence, the issue of levy of GST does not arise. However, it should be noted that the company had not availed of input tax credit for the GST charged by the insurance company. In this case, the AAR bench relied on a similar ruling given in 2018 in the case of Posco India Pune Processing Center. Lately, several AAR benches have adopted a similar stand that GST cannot be levied in cases of recovery of sums from employees for a wide range of services, such as a nominal amount recovered for canteen services or even parking. As reported by TOI earlier, the Gujarat bench of the AAR had held in the case of Tata Motors that GST would not be levied on the nominal amount recovered from employees for canteen facilities, which is passed on by the company to the third-party caterer. However, it had also added that input tax credit would be blocked. According to indirect tax specialist Sunil Gabhawalla, “The correct view is that there should be no recovery on nominal sums received from employees as there is no taxable supply. If this line of argument does not hold good, it can be argued that the company is acting as a pure agent and the value of ‘services’ should be taken as nil.” To illustrate, in the case of Ion Trading, a Noida-based subsidiary of a UK company, the UP bench of the Appellate Authority for Advance Rulings had held that the parking charges collected from employees and passed on to the building authorities was a service. However, it went on to add that the company qualified as a pure agent. Thus, there would be no GST levy on sums collected from employees.