Provision of free transport facility provided to employees for business purposes cannot be regarded as 'service' because work done and wages received are independent of use or otherwise of such facility by employees and, hence, a proportion of work performed by employee does not amount to consideration
In the instant case, the assessee-builder was engaged in construction work. It provided free transport facilities/services to its employees for their transport from residence to building sites and vice versa. Department argued that it was a service and consideration received by assessee-employer was work done by employee and therefore was liable to VAT under German law.
The European Court of Justice held as under:
1) Since work to be performed and wages received are independent of use or otherwise by employees of transport facilities provided to them by their employer, it was not possible to regard a proportion of work performed as being consideration for transport services;
2) Thus, there was no consideration which had a subjective value and a direct link with service provided. Consequently, it could not be charged to service tax/ Vat - JULIUS FILLIBECK SÖHNE GMBH & CO. KG V. FINANZAMT NEUSTADT  30 taxmann.com 433 (ECJ)
Tags-free transport service,free transport service to employees,service tax on transport to employees