TaxTMI 
TaxTMI 
2022 (4) TMI 1335
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....ows: i. Ahmedabad has skilled pharmaceuticals talent which is required to run the business operations smoothly. The plant is about 35 kms away from Ahmadabad and most of our employees are travelling to various part of Ahmedabad. ii. All company employees shall be eligible to avail the transportation facility. iii. The transportation benefits will be provided with no cost to employees/travellers. iv. All cost related to this benefit shall be borne by the company. Canteen Facility and Deduction Canteen Facility details are as follows: Nutritious food is provided in the canteen at a subsidised rate. These subsidized rates are subject to revision at the discretion of Management. The rates so fixed are for the month irrespective of number of days on which the canteen facilities are availed. Canteen facilities are not available in third shift. Snacks are catered for the employees working in the Third shift. 2. M/s. Emcure submitted that in order to provide the said canteen and bus transportation facility, it engaged third party service providers who are in turn providing the said canteen and bus transportation facilities t....
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....rder to constitute supply under Section 7, the supply should be in the course of business or furtherance of business. The term in the 'course of business' or 'furtherance of business' is not defined under the CGST Act. However, the term Business has been defined under Section 2 (17) of the CGST Act and reads as - Section 2 (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; (f) admission, for a consideration, of persons to any premises; (g) services supplied....
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....siness of M/s. Emcure. 4.7 In this regard M/s. Emcure cited the following cases : (i) Deputy Commissioner of Commercial Taxes vs. Thirumagal Mills Ltd. [1967 (20) STC 287 Mad]. (ii) In the case of Panacea Biotech Limited vs. Commissioner of Trade and Taxes [(2013) 59 VST 524 (Del.)] 5. M/s. Emcure submitted that without prejudice to the above, the canteen facility provided by it is excluded from the scope of supply in terms of Clause (a) of Section 7 (2) of the CGST Act. Clause (a) of Section 7 (2) of the CGST Act which reads as below: "Section 7 (2) Notwithstanding anything contained in sub-section (1),- (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services" "SCHEDULE III [See section 7] ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES 1. Service....
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....mcure is of the view that the provision of canteen facility is excluded from the purview of supply. 5.5 M/s. Emcure submitted that without prejudice to the above, it is settled position under GST regime that an employee recovery does not amount to 'supply'. In this regard they have relied upon the following rulings of the Hon'ble Advance Ruling Authorities, wherein it is held that no GST is to be included on the recoveries made by a company on canteen facility provided through a third party to their employees: • In Re: M/s Amneal Pharmaceuticals Pvt Ltd., 2021 (9) TMI 1293 - Appellate Authority for Advance Ruling, Gujarat; • In Re: M/s Dishman Carbogen Amics Ltd., 2021 (8) TMI 836 - Authority for Advance Ruling, Gujarat; • In re: M/s Bharat Oman Refineries Limited 2021-VIL-73-AAAR The Madhya Pradesh Appellate Authority For Advance Ruling • M/s Jotun India Private Limited, [2019-TIOL-312-AAR-GST]. Maharshtra Authority for Advance Ruling. • Advance Ruling in the case of M/s POSCO India Pune Processing Centre Private Limited [2019 (2) TMI 63]. 6. M/s. Emcure submitted that the employee recoveries for providing bus ....
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....Code (Tariff) Service Description 89 Heading 9964 Passenger Transportation Service Group 99641 Local transport and sightseeing transportation services of passengers 996411 Local land transport services of passengers by railways, metro, monorail, bus, tramway, autos, three wheelers, scooters and other motor vehicles 6.6 It is submitted by M/s. Emcure that the local transportation services of passengers through buses are covered under Tariff 996411. Therefore, the local passenger transportation facility within the city in the given case in hand, if classified as service would merit classification under the Tariff 996411 only. Further, the Explanatory Notes issued by the CBIC also provides that the services provided by bus within city limits would be very well classified under Tariff 996411. The Explanatory Notes also provides that the renter defines the travel routes in case of passenger transportation services. In the given case, the said conditions are satisfied. 6.7 M/s. Emcure submits that even in case where the bus transportation facility provided by them to its employees amount to supply, the said s....
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....ted from one location to another against certain amount. Therefore, the said buses in question used for employee transportation would be covered under the definition of contract carriage. M/s. Emcure submits that as per Sl. No. 15 (b) of the Exemption Notification, the Non-AC buses being a Non-AC contract carriage would be covered under the exemption from GST. 6.11 M/s. Emcure cited that Maharashtra Advance Ruling Authority in the case of M/s. Emcure Pharmaceuticals Limited, [Applicant's own case for the state of Maharashtra] has given the ruling that canteen services and bus services by the Applicant to the employees is not covered under the definition of 'supply' under GST and hence not liable for payment of GST. 7. M/s. Emcure submitted that it is eligible to avail the input tax credit for the GST paid on purchase of canteen services in terms of Section 16 of CGST Act. The relevant provisions of Section 17(5) of CGST Act reads as follows: '17. Apportionment of credit and blocked credits - (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 fol....
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....el concession: 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.' 7.1 M/s. Emcure submitted that as per Section 46 of the Factories Act, 1948, every factory is mandatorily required to provide and maintain canteen in the factory in which more than 250 workers are employed. Therefore, in order to comply with the said mandatory condition, they are providing and maintaining the canteen at the factory. Therefore, it is submitted that applying the proviso under Section 17(5)(b) 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. As such it is of strong view that the input tax credit on canteen services is not blocked under Section 17(5) of CGST Act and the same is eligible to it. 8. M/s. Emcure submitted that it is eligible to avail the input tax credit for the GST paid on availing bus services in terms of Section 16 of CGST Act. Further, submitted by M/s.Encure, that Section 17(....
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....y the Maharashtra Authority for Advance Ruling vide Order No. GST-ARA-119/2019-20/B-03 dated 4-1-22. (iii) Further, relevant portion of Section 17(5)(b) is reproduced: 17. Apportionment of credit and blocked credits- (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:- (b) [the following supply of 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 services or both shall be available where an inward supply of such goods or services or both is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; (ii) membership of a club, health and fitne....
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....pply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; (ii) membership of a club, health and fitness centre; and (iii) travel benefits extended to employees on vacation such as leave or home travel concession: 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." 13.1 We note that sub clause of Section 17(5)(b)(i) ends with colon : and is followed by a proviso and this proviso ends with a semicolon. 13.2 Colons and semicolons are two types of punctuation. Colons are used in sentences to show that something is following, like a quotation, example, or list. Semicolons are used to join two independent clauses/ subclauses, or two complete thoughts that could stand alone as complete sentences. That means they're to be used when you're dealing with two complete thoughts that could stand alone as a sentence. 13.3 We find that semicolon creates a wall for conveying mutual exclusivity between the sub-clauses, in present matter. ....
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....y and control to carry out the functions of municipality under article 243W of the Constitution, is relevant for both the clauses separated by semi colon or not. In this decision, the High Court is of the opinion that the clause (i) is followed by ";" and the word "or". Therefore, each of the sub-clauses is independent provision and condition of 90% participation would not be applicable to clause (i). ITC on hiring of Bus of more than 13 seater 14. The relevant provisions of Section 17(5) CGST Act, 2017 reads as follows: '(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) motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely:- (A) further supply of such motor vehicles; or (B) transportation of passengers; or (C) imparting training on driving such motor vehicles; ..... ....... (b) the following supply of goods or s....