TaxTMI 
TaxTMI 
2020 (2) TMI 1416
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....s. 1.3 The applicant company is a manufacturing unit of product as mentioned above having around 2400 of full time working employees as well as contract based employees. As per Section 46 of the Factories Act, 1948, it is mandatory for every Employer to provide canteen/food facilities for employees, if the number of employees are more than 250. So, company is under mandate by law to provide Canteen/food facilities to employees working there in. 1.4 The Applicant company incurs lots of expenses on maintenance of Canteen facility including deployment of its own employees for supervision & management of canteen operations, providing utilities, supply of utensils, equipment's etc. The Applicant company recovers a nominal amount from the employees as a reimbursement of expenses under Employment relationship without any commercial objective but to maintain discipline and prevent wastage of food and resources. 1.5 A nominal amount is recovered by the company by way of Coupon Sale or by way of a card punch per meal from employees towards management costs of Canteen. 1.6 Further, the applicant company also purchases edible items like Sweets, Dry fruits, and gifts like electronic....
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.... (a) The date by which such canteen shall be provided; (b) the standards in respect of construction, accommodation, furniture and other equipment of the canteen; (c) the foodstuffs to be served therein and the charges which may be made therefor; (d) the constitution of a managing committee for the canteen and representation of the workers in the management of the canteen; 1[(dd) the items of expenditure in the running of the canteen which are not to be taken into account in fixing the cost of foodstuffs and which shall be borne by the employer;] (e) The delegation to the Chief Inspector, subject to such conditions as may be prescribed, of the power to make rules under clause (c). A6. Section 17 (5) (b)(i)specifies the situation where certain categories of input tax credit have been stated to be not available to the registered person and reads as follow: "Section 17. Apportionment of credit and blocked credits (5) Notwithstanding anything contained in sub-section (1) of Section 17 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:- (b) the following supply....
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.... Arrangement: B 1. The applicant company recovers a nominal amount from the employees as a reimbursement of expenses under employment relationship against facility provided to them in order to maintain some discipline in canteen operations. So, in order to reimburse the same amount, company distributes coupons to interested employees for tea, snacks & lunch so as to avoid any kind of wastage and maintain discipline. Keeping in view, the nature of transaction, the tax shall not be levied following the contention as mentioned under: a. The company is recovering the nominal charges in order to maintain discipline and not for the purpose of supply of such service. Also it is well pertinent that the charges what they are recovering is less than what is actually the landing cost to the company. So, in this case, there is no value addition and the principle of GST is to tax value addition. b. Further, the amount recovered is under Employer-Employee relationship and anything which is done under such relationship is exempt from being taxed under Schedule-III(1) of the CGST Act, 2017 c. Moreover there is no defined Service Accounting Code for such supply of coup....
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.... coins/articles etc. for the purpose of Business Promotion. Question arises as under: a) Whether Company is eligible to take Input Tax Credit on such business promotion expenses or not? 4. Discussion: 4.1 Musashi Auto Parts India Private Limited ('Applicant') is a company incorporated under the provisions of the Companies Act, 1956/2013 and is engaged in the business of Manufacturing & supply of Automobile Parts (Two Wheelers and Four Wheelers). 4.2 The applicant company is a manufacturing unit having approximately 2400 full time working employees as well as contract based employees. As per Section 46 of the Factories Act, 1948, it is mandatory for every Employer to provide canteen/food facilities for employees, if number of employees are more than 250. So, the company is under mandate by law to provide Canteen/food facilities to employees working therein. 4.3 The Applicant company provides Canteen food as a welfare measure to its employees. The Applicant company incurs lots of expenses on maintenance of Canteen facility including deployment of its own employees for supervision & management of canteen operations, providing utilities, supply of utensils, equipme....
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....t means anything done in relation to business or while carrying out any business activity. The term business has been defined under Section 2(17) of the CGST Act which reads: "business" includes- (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; (d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business; (e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members; (f) admission, for a consideration, of persons to any premises; (g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation; (h) servi....
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.... automobiles and not in the business of provision of food or catering. The mandate of the Factories Act to provide meals to the employees does not mean that such provision is in the course of furtherance of business. Even if the provision of food and catering had been in the course of furtherance of business, the applicant would not have been entitled to the input tax credit in light of the express bar provided under section 17 (5) (b)(i) of the CGST Act, 2017. The applicant has relied upon the following proviso for its claim of input tax credit. "Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force." But a careful reading of section 17(5) would suggest that this proviso is with regard to the provision contained in section 17 (5) (b)(iii) and not section 17 (5) (b)(i). In light of the above provisions, the applicant is not eligible for claim of input tax credit with respect to the goods and services tax paid by it against the receipt of food and catering services supplied by the vendor. As regards the iss....
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....r services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. (2) The value of supply shall include- (a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier; (b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both; (c).................... (d)................... (e) Subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments. As discussed the applicant has been incurring the cost of LPG etc. and the caterer is subsidizing the food in lieu of that, therefore, in li....