TaxTMI 
TaxTMI 
2021 (12) TMI 266
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....icant. 4. The applicant has submitted that- (i) they had agreement with different parties for supply of manpower. (ii) The agreement had two elements one is payment against services and second one is the discharge of their statutory liabilities against the workers compensation act like EPF, ESI or other statutory liabilities. (iii) These statutory liabilities as per Act rest with the factories or the working place and in order to minimize their work burden, they had shifted the liability of deposit of said statutory liabilities to service providers, which is subsequently reimbursed to them. (iv) As per agreement, service providers raise two bills one for charges for the service and the other for reimbursement of discharge of statutory liabilities. (v) Rule 33 of the GST Rules says that expenditure or cost incurred by supplier as a pure agent of the recipient of supply shall be excluded from the value of supply. (vi) The Advance Ruling Authority, Karnataka {reported in 2020 (32) GSTL 49 (AAR-GST-Kar) had pronounced that Group Insurance and workmen compensation scheme is meant for benefit of workers and not for the profit of se....
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....owing question- 1. GST liability on reimbursement of Employee Provided Fund & ESI. 10. We find that the applicant had enclosed Work Order dated 22.02.2017 along with the application of advance ruling. The said Work Order is for manpower supply and loading/unloading work. As per the Work Order, the applicant pay wages and service charge to contractor and reimburse EPF, ESI, Service Tax, Bonus after payment by the contractor. The applicant had sought ruling on GST liability on reimbursement of EPF and ESL 11. In order to find the value of supply of goods or supply of services in GST, we need to examine the term Consideration which is defined under Section 2 (31) of CGST Act, 2017 as under:- "(31) "consideration" in relation to the supply of goods or services or both includes- (a) any payment made or to be made, whether in money or otherwise, in respect of in response to, or for the inducement of the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of in respon....
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....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) incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of or before delivery of goods or supply of services; (d) interest or late fee or penalty for delayed payment of any consideration for any supply; and (e) subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments. Explanation.-For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy. (3) The value of the supply shall not include any discount which is given- (a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and (b) after the supply has been effected, if- (i) suc....
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....ession `pure agent" means a person who- (a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both; (b) neither intends to hold nor holds any title to the goods or services or both so procured or supplied as pure agent of the recipient of supply; (c) does not use for his own interest such goods or services so procured; and (d) receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account. Illustration.- Corporate services firm A is engaged to handle the legal work pertaining to the incorporation of Company B. Other than its service fees, A also recovers from B, registration fee and approval fee for the name of the company paid to the Registrar of Companies. The fees charged by the Registrar of Companies for the registration and approval of the name are compulsorily levied on B. A is merely acting as a pure agent in the payment of those fees. Therefore, A's recovery of such expenses is a disbursement and not part of the value of s....