TaxTMI 
TaxTMI 
2021 (12) TMI 320
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.... such a similar provision under the CGST or MPGST Act would he mentioned as being under the GST Act. 3. BRIEF FACTS OF THE CASE- 3.1 M/s Bharat Oman Refineries Limited (BORL) is a Company registered under the Companies Act, 1956 with Registrar of Companies, Gwalior and is carrying on the business of Refining of Crude Oil in the Refinery located at Village Agasod, Bina. District Sagar, Madhya Pradesh. 3.2 M/s. Bharat Oman Refineries Limited is head quartered at Village Agasod. Bina, District Sagar (M.P.). 3.3 The applicant is registered under GST Act in the State of Madhya Pradesh, vide GSTIN : 23AABCB7084M1ZH and the principal place of business is at Gautam Nagar, Bhopal - 462023. 3.4 M/s BORL is a deemed Public Sector Undertaking, as the holding company. M/s Bharat Petroleum Corporation Limited (BPCL) has 51% paid up capital in the company. 3.5 This application u/s 97 of the Act seeking Advance Ruling is being made on the following points : (i) Determination of liability to pay tax on any goods or services or both. (ii) Admissibility of input tax credit of tax paid or deemed to have been paid. 4. QUESTION RAISED BEFORE THE AUTHORITY - 1. W....
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....amount for availing the facility of Canteen at the refinery at Bina when it is no supply as per clause 1 of schedule III of CGST ACT, the jurisdictional officer is of the view GST is not applicable on recovery of nominal amount for availing the facility of Canteen at the refinery at Bina when it is no supply as per clause 1 of schedule III of CGST ACT. 5.4. On Question IV Whether GST is applicable on recovery of telephone charges recovered from employees over & above fixed rental charges payable to BSNL. The jurisdictional officer is of the view that GST is not applicable recovery of telephone charges recovered from employees over & above fixed rental charges payable to BSNL. 5.5. On Question V Whether full ITC is available to the applicant as per question Nos II,III, IV or ITC will be restricted to the extent of GST borne by the applicant employer on the issues - A. Company provide canteen facility to its employees as per Factories Act, 1948. Since this is mandatory, ITC of canteen services provided to employees should be available in view of proviso to section 17(5)(h) of CGST Act. This clause is inserted vide CGST (Amendments) Act, 2018 w.e.f. 01-02-2019. Which pr....
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....ady made in the application, and attached additional submissions as follows : At the outset we refer here various provisions of the GST Act which have been referred and relied upon by the applicant in support of their interpretation in respect of the questions raised by them in this application : Legal provisions referred and relied upon by the Applicant : [A] Section 2(17) of GST Act reads as under: "(17) '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; ....
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....e Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. (3).................................." See. 17 : Apportionment of credit and blocked credits (1)............................... (2) Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies. (3) The value of exempt supply under sub-section (2) shall be such as may be prescribed, and shall include supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building. Explanation : For the purposes of this sub-section, the expression "value of exempt supply" shall not include the value of activities or transactions specified in Schedule II....
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....applicant-company recovers from the employee the amount equal to his salary for the number of days for which he is not able to serve the notice. The requirement of notice period of 30 days from the employee who wants to quit the organization is to provide time to the organization to find out replacement of the said employee, and also to ensure that all the pending assignments are assessed and to take stock of all the work assigned to the said employee. The applicant relied upon decision of Madras High Court in the case of GE T&D India Ltd. Vs. Dy. Commissioner of Central Excise, Chennai in W.P. Nos. 35728 to 35734 of 2016 delivered on 7.11.2019 on the applicability of identical provisions under Service Tax regime. Copy of the said judgement is as EXHIBIT I. In the said judgment, the Madras High Court has ordered as under: "Equally, so in my view, the employer cannot be said to have rendered any service per se much less a taxable service and has merely facilitated the exist of the employee upon imposition of a cost upon him for the sudden exit. The definition in clause (e) of Section 66E, as extracted above, is not attracted to the scenario before me as, in my considered....
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....f GST Act, an activity constitutes a supply when it is made by a person in the course or furtherance of business. If an activity or transaction is not in the course or furtherance of business, it shall not constitute supply within the meaning of Section 7(1) of GST Act. The expression "business" is defined u/s 2(17) of GST Act, but 'in the course or furtherance of business" has not been defined anywhere under GST Act. The applicant-company is recovering premium of Group Medical Insurance Policy at actuals pertaining to non-dependent parents of employees, and the retired employees. The applicant-company is not an insurance company and is not providing any insurance services. The service of insurance has been provided by insurance company and the applicant-company is simply collecting insurance premium at actuals for non-dependent parents and retired employees and remitting the same to the insurance company. Applicant's interpretation of legal provisions : As per definition of "business", the collection of premium of insurance policy is not the business of the applicant. Moreover, this activity or transaction is not in connection with or incidental or ancillary to the busine....
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....pretation of legal provisions : As per Section 46 of Factories Act, 1948, it is mandatory for the applicant to provide canteen facility to its employees, and it cannot do business without providing canteen facility to its employees. For supply of canteen services, the applicant is not charging the amount from its employees at actuals, but at a subsidised rate. The activity of supply of canteen services is in the course or furtherance of business of the applicant. It is part and parcel of employment contract between the employer and the employee. As such, it is a service by an employee to the employer in the course of or in relation to his employment. As per clause 1 of Schedule III of GST Act it is neither a supply of goods nor a supply of services. As per Section 7(2) of GST Act, Schedule III supersedes Schedule I and Schedule II. Canteen services provided by employer to its employees are in the course of for in relation to employment. The applicant is of the view that no GST is payable on supply of canteen services by employer to employees, as it is outside the purview of GST being part and parcel of employment contract. The list of documents and case law relied upon by ....
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....19 taxmann.com 106 (AAR-Maharashtra), where it has been ruled that no GST is applicable on recovery of nominal amount from employees for use of bus transportation facility by the employees in non-AC bus. The list of documents and case laws relied upon by the applicant is as under: 1. Copy of tax invoice making telephone recovery from employees - EXHIBIT 17 2. Copy of Advance Ruling dated 25.08.2020 of AAR-Maharashtra in the case of Tata Motors Ltd. - EXHIBIT 12 3. Copy of Advance Ruling dated 04.10.2019 of AAR-Maharashtra in the case of Jotun India (P) Ltd. - EXHIBIT 13 4. Copy of Advance Ruling dated 07.09.2018 of AAR-Maharashtra in the case of Pasco India Pune Processing Canter (P) Limited - EXHIBIT 14 QUESTION V Whether full ITC is available to the applicant as per question Nos. II, III & IV, or ITC will be restricted to the extent of GST borne by the applicant-employer ? FACTS The facts relating to Question V are the same as are enumerated with Question Nos. II, III & IV, as this question is related to availment of ITC with regard to inward supply of goods or services or both. Applicant's interpretation of legal provisions :....
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.... The applicant is of the view that no GST is payable on providing free canteen services to its employees, as it is covered by para I of Schedule Ill of GST Act. It is neither a supply of goods nor a supply of services. Being covered under Para 1 of Schedule III, such services are not liable to GST. Section 7(2) of GST Act, which prescribes Schedule Ill, begins with the wordings "notwithstanding anything contained in sub-section (1)", which is a non obstante clause and should prevail over activities and transactions contained in Schedule I and Schedule 11 and the scope of supply as described in Section 7(1). The activity of providing canteen services to the employees on FOC basis is covered by para 1 of Schedule III. The list of documents and case law relied upon by the applicant: 1. Copy of Press Release dated 10.7.2017 issued by CBIC - EXHIBIT 18 QUESTION VII If reply to Q. VI is yes, whether in view of the explanation to Section 17(3) of GST Act, ITC shall be available to the applicant on the goods and services used for providing free canteen services to the employees ? FACTS The facts relating to Question VII are the same as the facts relating to Question VI....
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...................... (e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act." (6) Para 2.9.3 of CBEC's Guidance Notes dated 20.6.2012 states as follows : Provision of service by an employee to the employer is outside the ambit of service. 2.9.3 Would amounts received by an employee from the employer on premature termination of contract of employment be chargeable to service tax? Section 17(5)(b) of GST Act reads as under:- "(5) Notwithstanding anything contained in sub-section (1) of Section 16 and sub-section (1) of Section 18, input tax credit shall not be available in respect of the following, namely : (a)........................ (b) the following supply goods or services or both - (i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance : Provided that the input tax credit in respect of such goods or se....
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.... by applicant that it is not covered by the definition of business as given in Section 2(17). However, both the contentions of the applicant are not valid. As per clause (a) of Section 2(17) business includes any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not there is volume, frequency. continuity or regularity of such transaction. As per clause (6) of Section 2(17) any activity or transaction in connection with or incidental or ancillary to any activity or transaction referred in clause (a) of Section 2(17) are also covered in business. Had the services been provided by applicant as pure agent as per Rule 33 of GST Rules, then there would have been no liability to pay GST. But, the applicant has not provided the insurance service to the non-dependent parents of employees & retired employees as an agent of the Insurance Company. Therefore, the premium of Group Medical Insurance Policy recovered by applicant from the non-dependent parents of employees & retired employees will fall within the ambit of supply and is liable to GST. Question 3 is relating to applicability of GST on recovery of nominal amount fo....
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.... in respect of premium of Group Medical Insurance Policy is concerned, it will be governed by provisions of clause (b)(i) of Section 17(5), and accordingly Input Tax Credit for the same shall be available if its inward supply is used for making supply of the same category of goods or services, or as an element of a taxable composite or mixed supply. The recovery of premium of Group Medical Insurance Policy from the non-dependent parents of employees & retired employees at actuals is a supply of the said services by the applicant. It is an activity or transaction in connection with or incidental or ancillary to the main activity of the applicant, and therefore, it is covered in business as defined in Section 2(17) of GST Act. As per said section business includes any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not there is volume, frequency, continuity or regularity of such transaction. As per clause (b) of Section 2(17) any activity or transaction in connection with or incidental or ancillary to any activity or transaction referred in clause (a) of Section 2(17) are also covered in business. Thus, the transact....
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.... words "which is a mandatory rate" and the words "shall not be levied at the rate as specified under this entry" clearly indicate that the rate of 5% (2.5+2.5) for canteen services without ITC is mandatory without any option for the applicant to pay tax at full rate and claim ITC on the related inputs and input services. In respect of telephone charges paid to BSNL, the applicant shall be eligible to claim Input Tax Credit, because it is a further taxable supply by the applicant. The said transaction comes under clause (b) of Section 2(17) as a transaction incidental or ancillary to the main business of the applicant, and is liable to tax. Moreover, telephone charges are not covered by the provisions of Section 17 relating to blocked credit Therefore, the applicant is eligible for ITC in respect of such telephone charges. Question 6 is relating to levy of GST on canteen services provided to the employees without charging any amount (free of cost). As per discussion in reply to question 3, it is clear that transactions between employer and employee are covered by clause 2 of Schedule I. It does not fall under pars I of Schedule III as that clause is pertaining to "Services pro....