TaxTMI 
TaxTMI 
2021 (12) TMI 266
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....) 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 service recipient or service providers and so it is not taxable under GST. (vii) The bills ra....
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....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 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 subsid....
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....(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) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and (ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has be....
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....ed 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 supply made by A to B. 17. The condition contained in rule 33(iii) of the CGST Rules, 2017 provides that "the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account". In the instant case, Labour contractor cannot be treated as pure agent a....