TaxTMI 
TaxTMI 
2022 (10) TMI 304
X X X X Extracts X X X X
X X X X Extracts X X X X
....TC availment in inward supply Payment of GST on outward supply 1 Full-time employees ID card or biometric On the basis of consumption Subsidized value deducted from salary on actual consumption and disclosed under the deduction side of the salary pay slip Deduction is credited to the canteen expense account while the full amount of the invoice issued by the Canteen Service Provider is booked as expense in the Applicant's Profit & Loss account ITC of the GST paid on the Canteen Service Provider's invoice is not availed GST is paid on the basis of the number of punches in the system during the month on open market value (i.e. the value charged by the canteen service provider) 2. The employees are charged only for the days on which the employee had punched his ID card and an amount at pre-determined percentage shall he deducted from the salary payable to the respective employee. The above deduction is credited to the expense account in which canteen expense is booked while the full amount of the invoice issued by the Canteen Service Provider is booked as expense in M/s Zydus Profit & Loss account without taking the benefit of ITC of the GST paid o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mitted that canteen Service Provider have entered into an agreement that M/s Zydus shall pay full amount to the service provider for the food served during a prescribed period on behalf of the employees and a pre-determined percentage of the amount paid by the M/s Zydus is recovered from the employees (without any profit) and the balance amount is borne by M/s Zydus, is being treated as staff welfare expense towards subsidized food served to the employees. 4. M/s Zydus has submitted as follows: 4.1 The amount deducted from the salary of the employees for providing the subsidized canteen facility, cannot be considered as supply under Section 7 of CGST Act. In this regard, the Applicant has completely placed its reliance upon the following interpretation of the legal provisions: Concept of 'Supply' under CGST Act and its applicability thereof: 1.1. Section 9(1) of the CGST Act provides that there shall be levied a tax called the Central Goods and Service Tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding 20% as may be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pplier is the Canteen Service Provider and invoice is raised on M/s Zydus, but the ultimate recipient of such canteen facility is the employee. M/s Zydus merely allows the Canteen Service Provider to use his demarcated area i.e. canteen area for serving food to the employees and makes payment to the Canteen Service Provider on behalf of the employees for administrative convenience. 1.6. M/s Zydus has relied upon the recent ruling of Gujarat AAR in his own case Cadila Healthcare Limited- Gujarat state (GUJ/GAAR/R/2022/19 Dated 12.04.2022) wherein it has held that "GST, at the hands on the applicant, is not leviable on the amount representing the employees portion of canteen charges, which is collected by the applicant and paid to the Canteen service provider" 1.7. M/s. Zydus placed reliance on the ruling of Gujarat AAAR in the matter of Amneal Pharmaceuticals Pvt. Ltd [TS-569-AAAR(GUJ)-2021-GST] wherein the ruling of AAR was modified and it was ruled that no GST to be levied on third-party canteen charges collected by employer from employee. The relevant extract of the said ruling is provided below; Gujarat AAAR rules that GST "is not applicable on the collection, by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the public highway for which no remuneration is stipulated, even if musician solicits money and receives sum whose amount is however neither quantified nor quantifiable. The principle espouses here was that a supply of services is effected for consideration only when the provider of the service and the recipient enter into a legal relationship wherein the provider carries out a service and receives remuneration in return for the said service-which was absent in the public performance on the highway owing to lack of intention. In the present case also; there was no intention of the M/s Zydus to contract with its employees with respect to the service of food and beverages in its canteen premises - and hence, this basic requirement of qualifying as a supply itself is not satisfied. 1.10. M/s Zydus has submitted that in light of the above judgement, that there must be a legal intention to enter in a contractual relationship with its recipient, which casts roles and responsibility on each of the contractual party, in order to fall under the ambit of Supply under GST. Unless there is an intention to provide a service, the same shall not be treated as Supply within the meaning of Secti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....haldas Laxmidas Bhatia, Smt. Indu Vithaldas Bhatia vs. Suchitra [Commercial Suit (1) No. 236 of 2017], has held that for GST to be payable on any payment, there must be the necessary quality of reciprocity to make it a 'supply'. 1.16. M/s Zydus submit that it deducts a pre-determined amount from the employee's salary as a recovery of expenses under employment relationship without any commercial objective. The same is also shown as a deduction in the salary slip provided to the employees. Based on the above interpretation, it can be said that there is no reciprocity of any activity or transaction i.e. when is no express or implied reciprocity i.e. quid-pro-quo, between the Applicant and the employees. Thus, in the absence of an identifiable supply, the activity would not constitute 'consideration' for any supply. 1.17. M/s Zydus has submitted that Section 7 of the CGST Act, (Supra) states that an activity could be considered as a supply only if it is in the course or furtherance of business. Thus, it becomes important to analyze whether provision of canteen facility because of the statutory obligation could be considered as "in the course or furtherance of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....om something that is a product of nature. Manufacturers are one of the statutory categories of inventions that can be patented. Examples of manufactures are chairs and tires." d. Profession - "A vocation requiring advanced education and training. Collectively, the members of such vocation." e. Vocation - "A person's regular calling or business; one's occupation or profession." f. Adventure - "A commercial undertaking that has an element of risk; a venture. Cf. Joint venture; A Voyage involving financial and insurable risk, as to a shipment of goods." g. Wager - "Money or other consideration risked on an uncertain event; a bet or gamble. A promise to pay money or other consideration on the occurrence of an uncertain event. See wagering contract under Contract." 1.21. M/s Zydus placed reliance on Cinemax India Limited Vs Union of India (Special Civil Appeal Nos. 8032, 966L 11032, 111 IL 12933 of 2010 and 707 of 2011 decided on 23.08.2011) wherein the term 'furtherance of business' has been pointed out as:- "The meaning of 'furtherance', as per Black's Law Dictionary, 6th Edition. 11th reprint, 1997, is act of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....plications on the services of Employer and Employee has been clarified. Para 3 of the said circular provides that:- "It is pertinent to point out here that the services by an employee to the employer in the course of or in relation to his employment is outside the scope of GST (neither supply of goods or supply of services). It follows there from that supply by the employer to the employee in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST. Further, the input tax credit (ITC) scheme under GST does not allow ITC of membership of a club, health and fitness centre [section 17 (5) (b) (ii)]. It follows, therefore, that if such services are provided free of charge to all the employees by the employer then the same will not be subjected to GST. provided appropriate GST was paid when procured by the employer. The same would hold true for free housing to the employees, when the same is provided in terms of the contract between the employer and employee and is part and parcel of the cost-to-company (C2C)." 1.28. M/s Zydus submitted that considering the press release dated 10th July 2017, common facilities provided c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al amount recovered by the applicants from their employees. (ii) Maharashtra AAR in case of M/s The TATA Power Company Limited (NO.GST-ARA-99/2019-20/B-92) wherein the authority has held that amounts recovered towards Top-up and parental insurance premium from the employees, does not amount to a supply of any service under section 7 of the Central Goods & Service Tax Act, 2017. (iii) In case of Posco India Pune Processing Center Private Limited [GST-ARA-36/2018-19/B-110 dated 7 September 2018], wherein the Applicant was paying the premium towards mediclaim taken for their employees and the parents of such employees against such payments made they were recovering 50% from their employees. The AAR Maharashtra held that there is no way that the 50% amount recovered can be treated as amounts received for services rendered, since this entire amount is paid to the insurance company which is providing mediclaim facilities to the employees and their parents. Such recovery' of 50% premium amounts by the applicant from their employees cannot be supply of services under the GST laws. (iv) In case of In Re: M/s Jotun India Pvt Ltd [2019 (10) TMI 482] by the Autho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the submission. Further on being specifically asked, stated that in the applicant factory approximately 1200 permanent employees on pay roll are working. Revenue's Submission: 7. Revenue has neither submitted its comments nor appeared for hearing. DISCUSSION AND FINDINGS: 8. We have considered the submissions made by the Applicant in their application for advance ruling as well as the submissions made by authorised signatory, during the personal hearing proceedings on 02-09-22 before this authority. We also considered the issue involved, on which advance ruling is sought by the applicant, relevant facts & the applicant's interpretation of law. 9. At the outset we would like to make it clear that the provisions of CGST Act and GGST Act are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the GGST Act. 10. We find M/s Zydus has arranged a canteen facility for its employees, which is run by a Canteen Service Provi....