Taxable value of manpower supply includes worker-related recoveries; input tax credit allowed on mandatory food and related inward services.

Amounts recovered from the service recipient for food, electricity, diesel, rent, building maintenance, security and housekeeping were held to form part of the taxable value of manpower supply because the applicant remained the employer of the deployed workers and failed to establish pure-agent treatment. GST was therefore payable on those recoveries as consideration linked to the manpower service. Input tax credit on food supply was allowed because the food/canteen facility was obligatory under labour law, bringing the claim within the statutory exception to the blocked-credit rule. Input tax credit on rent, security and housekeeping services was also allowed, subject to the general conditions, as those inward services were used for making taxable outward supply.

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Issues: (i) Whether the amounts recovered towards food supply, electricity charges, diesel charges, rent, building maintenance, security service and housekeeping and maintenance formed part of the taxable value of manpower supply. (ii) Whether the applicant was entitled to input tax credit on food supply. (iii) Whether the applicant was entitled to input tax credit on rent, security service and housekeeping and maintenance services.

Issue (i): Whether the amounts recovered towards food supply, electricity charges, diesel charges, rent, building maintenance, security service and housekeeping and maintenance formed part of the taxable value of manpower supply.

Analysis: The agreements showed that the applicant remained the employer of the deployed workers and that the additional recoveries were connected with expenses incurred for those workers. The arrangement for food and hostel-related facilities was not treated as a separate supply to the recipient, and the claim of pure agent treatment failed because the agreement provided for management fee, conditional reimbursement, and use of the facilities by the applicant's workers. On that basis, the recovered amounts were treated as consideration linked to the manpower service and required inclusion in the taxable value under the valuation provisions.

Conclusion: The recoveries are includible in the taxable value of manpower supply and are liable to GST at the applicable rate for manpower service.

Issue (ii): Whether the applicant was entitled to input tax credit on food supply.

Analysis: Food was required to be provided to the contract labour under the governing labour law, and the blocked-credit restriction was read with its proviso permitting credit where the inward supply is obligatory to be provided under any law. The Authority applied the post-amendment rule governing ITC on food and beverages in the context of a statutory obligation to provide canteen facilities to the workers.

Conclusion: Input tax credit on food supply is admissible.

Issue (iii): Whether the applicant was entitled to input tax credit on rent, security service and housekeeping and maintenance services.

Analysis: The inward services were used in the course of providing taxable manpower service, and the blockage under the credit provisions did not apply where the services were used for making outward taxable supplies. Subject to the general eligibility conditions for credit, the tax paid on such inward services was available as input tax credit.

Conclusion: Input tax credit on rent, security service and housekeeping and maintenance services is admissible, subject to the statutory conditions.

Final Conclusion: The ruling sustained GST liability on the recoveries treated as part of manpower supply value, while permitting input tax credit on food and on the other specified inward services within the statutory framework.

Ratio Decidendi: Amounts recovered from the service recipient for worker-related amenities form part of the taxable value when they are not shown to be pure-agent reimbursements, while credit remains available where the law obliges the employer to provide the relevant facility or where the inward service is used for outward taxable supply of the same category.

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