Appellate ruling: GST exemptions on notice pay, insurance premium, canteen services, telephone charges

The appellate authority ruled that GST is not applicable on various scenarios: payment of notice pay by an employee, premium of Group Medical Insurance policy recovered from non-dependent parents and retired employees, recovery of nominal amounts for canteen facility, and recovery of telephone charges from employees. Input Tax Credit (ITC) was denied for telephone charges and insurance premium but allowed for canteen services. The provision of free canteen services to employees without charge was also deemed exempt from GST.

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Issues Involved:
1. Applicability of GST on payment of notice pay by an employee.
2. Applicability of GST on premium of Group Medical Insurance Policy recovered from non-dependent parents and retired employees.
3. Applicability of GST on recovery of nominal amount for availing the canteen facility.
4. Applicability of GST on recovery of telephone charges from employees.
5. Availability of Input Tax Credit (ITC) for the applicant in respect of questions II, III, and IV.
6. Provision of canteen services to employees without charging any amount and its GST implications.
7. Availability of ITC on goods and services used in the provision of free canteen services to employees.

Detailed Analysis:

Issue 1: GST on Payment of Notice Pay
The appellate authority concluded that GST is not applicable on payment of notice pay by an employee to the employer in lieu of notice period. The authority referenced the Madras High Court decision in GE T&D India Ltd vs Deputy Commr of Central Excise, LTU, Chennai, which stated that the employer does not render any service by tolerating the employee’s premature exit. The authority emphasized that the compensation paid by the employee is related to the services provided by the employee during the course of employment, which is excluded from GST under Schedule III of the CGST Act.

Issue 2: GST on Group Medical Insurance Premium
The appellate authority found that GST is not applicable on the amount of premium paid towards Group Medical Insurance policy recovered from non-dependent parents and retired employees. The authority reasoned that the activity of recovering insurance premiums at actuals does not constitute a supply of service under Section 7 of the CGST Act. The appellant is not in the business of providing insurance services, and the recovery of costs is not in the course or furtherance of business.

Issue 3: GST on Canteen Facility Recovery
The appellate authority held that GST is not applicable on the recovery of nominal amounts for availing the canteen facility. The appellant provides the canteen facility as mandated by the Factories Act, 1948, and merely facilitates the supply of food to employees without making any profit. The appellant collects employees' share of the cost and pays it to the canteen service provider. Since the appellant does not supply any goods or services to employees and acts only as a mediator, the transaction does not involve a supply subject to GST.

Issue 4: GST on Recovery of Telephone Charges
The appellate authority concluded that GST is not applicable on the recovery of telephone charges from employees over and above the fixed rental charges payable to BSNL. The activity of providing telephone facilities to employees does not satisfy the conditions of Section 7 to be considered a supply of service, nor is it covered under the term "business" as defined in Section 2(17) of the CGST Act.

Issue 5: Availability of ITC
- Telephone Charges: ITC on GST paid to BSNL for telephone usage charges recovered from employees is not available, as the appellant does not provide any outward supply of telephone services, and the facility is not attributable to the purposes of their business.
- Insurance Premium: ITC on GST paid to the insurance provider is not available, as health insurance is excluded under Section 17(5) of the CGST Act, and the insurance services are not an outward supply of the appellant.
- Canteen Services: ITC on GST paid to the canteen service provider is available, as providing canteen facilities is obligatory under the Factories Act, 1948, and falls under the proviso of Section 17(5)(b) of the CGST Act.

Issue 6: Provision of Free Canteen Services
The appellate authority determined that the provision of canteen services to employees without charging any amount does not fall under Para 1 of Schedule III of the CGST Act. The canteen services are provided by the employer and are not part of the wage structure. However, GST is not applicable on the employer's activity of facilitating canteen services, as the employer acts as a mediator between the canteen service provider and the employees.

Final Order:
1. GST is not applicable on payment of notice pay by an employee to the employer in lieu of notice period.
2. GST is not payable by the employer on the amount of premium paid towards Group Medical Insurance policy recovered from non-dependent parents and retired employees.
3. GST is not payable by the employer on recovery of nominal amounts for availing the canteen facility.
4. GST is not payable on recovery of telephone charges from employees over and above the fixed rental charges payable to BSNL.
5. ITC on GST paid to BSNL and the insurance provider is not available, but ITC on GST paid to the canteen service provider is available.
6. Provision of canteen services to employees without charging any amount does not fall under Para 1 of Schedule III of the CGST Act.

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