TaxTMI 
TaxTMI 
2022 (10) TMI 305
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.... verbatim as under - "1. SCOPE OF SERVICE SRF hereby appoints the Service Provider for providing Industrial catering food & beverage services as mentioned herein and as per the terms and conditions and the Scope of Work ("SOW") more particularly described in Schedule I for the location/s listed in Schedule 2 ("Site ") on an exclusive basis ("Services") for the Term (as defined below) and the Service Provider hereby agrees to provide the services as per the minimum service levels, being the minimum acceptable levels of performance of the services by the Service Provider during the Term of Agreement as provided in Schedule 3 ("Minimum service levels/ MSLs") in accordance with the terms of this Agreement. Both the parties agree that as and when services are desired by SRF, the services will be added to the current SOW by way of an additional SOW along with the relevant terms and conditions of such additional services. In the event of a conflict between the terms and conditions of this Agreement and Statement of Work ("SOW"), the provisions of the Agreement shall prevail. The Service Provider willingly undertakes and accepts the service and assures SFR that they will ....
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.... 2023 Tea- 100 ml 1 6.00 5% increase on existing rate 6.30 3rd year rates to be revised as per Food article inflation index and manpower MWDA rise mutually Tea/ Coffee/Tray (With dip-dip tea bag) Nescafe, Sugar cubes Tray of one cup 10.15 5% increase on existing rate 10.20 Tray of two cup 18.00 5% increase on existing rate 18.90 Coffee- 100 ml 1 6.50 5% increase on existing rate 6.83 Milk-100 ml 1 6.50 5% increase on existing rate 6.83 Wet Snacks- 70-100gms Bhajia/ Batata Vada/Samosa/cutlet/Idli/Khaman/Upma etc 1 12.00 5% increase on existing rate 12.60 Dry Snacks- 70 gms Chevda/Ghatia/ Ratlami/ Sev/Tikki Sev/ Shakkar para/ Mixture/ Dal Moth etc 1 12.00 5% increase on existing rate 12.60 Biscuits/ Cold Drink/ Mineral water/ Namkeen/ wafers On MRP On MRP On MRP Meals (Lunch/ Dinner) 1. Roti/Puri/Paratha 125 gm 2. Rice/ Khichdi/ Pulao 125 gm 3. Kathol 100 gm 4. Seasonal Vegetable 100 gm 5. Dal/Kadhi 100 gm 6. Salad/ Pickle 15/5 gm 7. Curd/ Buttermil 50/150 ml 8. Papad/ Fry urns (small) 1 nos. 9. Sweet (....
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....tc.)." 2. The applicant has submitted that for providing the canteen services to the employees of the Applicant, 3rd party canteen service provider shall raise an invoice upon the Applicant. In exchange, the Applicant Company recovers a subsidized amount from its employees as per Canteen Policy No. FCB & SCB (D)/JET/PP/14.2 dated 01 April 2016, relevant extract of which is re-produced as under for ready reference:- POLICY Providing Canteen facility to employees at FCB & SCB Dahej PURPOSE To provide wholesome meal, tea and snacks to employees on duty ELIGIBILITY All employees at FCB & SCB Dahej RULES • Tea and Snacks will be served at main canteen and all the snacks' points located at various locations at plant. The current timings are mentioned below. • The company provides 70% subsidy on items prepared in the canteen and 30% of the cost will be borne by employee. This recovery will be done from monthly salary based upon actual number of Meals/Snacks consumed by employee. • Current rate of subsidy cost is as below Meal Type Recovery Amount in Rs Lunch/Dinner 13.5/- Breakfast/Evening or Night Snacks ....
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....l by company transport RULES • Transport is provided to & from Dahej and Baruch as per the fixed route • The employee must notify the Admin about the pick-up point on his joining. Admin to accordingly ensure planning of vehicles. • Transport is available at subsidized rates. The current rate of monthly recovery is as under Cadre Amount (Rs.) JE/Technician/Workmen 26/- Officer 260/- • This amount is fixed irrespective of number of days employee have availed the facility. • Employee needs to notify HR and Admin team in case employee do not use this facility and commute for work on his/her own, in that case monthly recovery will be stopped from next payroll cycle. • Any change of address in his/her tenure with FCB and SCB, to be informed to Admin. Based on the same a new pick-up point, if applicable, will be communicated by Admin. ANNEXURE • Declaration form for change in address 4.1 In order to provide this facility to the employees of the company, the applicant has entered into contract with 3rd party service vendors, namely, M/s Divya Travels (Agreement dated 01 Apr....
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....ded by the 3rd party canteen service provider and not by the Applicant - It is submitted that such canteen services to the employees have been provided by the 3rd party canteen service provider and not by the applicant for which an invoice has been issued upon the applicant along with GST thereon. The services have been consumed by the employees and directly provided by the 3rd party service vendor and merely facilitating the same and providing subsidy thereon, Applicant received the invoice thereof along with GST from 3rd party canteen service provider and reimbursed the same. In exchange thereof, Applicant charged a nominal sum from its employees. Thus, Applicant is not the service provider for the services rendered to the Applicant's employees and merely receiving a part of sum to be paid to 3rd party canteen service provider which is paid as it is without retaining any portion thereof or charging any markup therein. Accordingly, in absence of Applicant being service provider, no GST liability must arise on the part recovery made by the Applicant from its employees towards canteen charges. Furthermore, it is submitted that such services have already been ch....
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....ity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; ............................... (Emphasis Supplied) Analyzing the above definition of business, Applicant is of the view that the impugned facility cannot be said to be provided by way of any - (a) Any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity - The impugned facility cannot even fall within the phrase of 'any other similar activity' due to the reason that the said phrase will also cover the similar activity which is in the nature of trade, commerce etc. as per the Principal of Ejusdem Generis. "CONSTRUCTION EJUSDEM GENERIS According to the Black's Law Dictionary (8th edition, 2004) the principle of Ejusdem Generis is where general words follow an enumeration of persons or things, by words of a particular and specific meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to persons or things of the same general kind or class as those specifically mentioned. It is a canon o....
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....es canteen and bus transportation facility to its employees as a part and parcel of the employment arrangement vide letter of employment ("Employment Agreement") to employees, which contains the terms & conditions of employment as per its HR Policy. Canteen & Bus Transportation 2.2 The Applicant makes recoveries at subsidized rates for providing canteen and bus transportation facility to its employees and has engaged third party service providers to provide the said facilities and the service providers raise invoices with applicable GST. The Applicant recovers a certain portion of the consideration paid to such third-party service providers from its employees. ................. 5. OBSERVATIONS AND FINDINGS: 5.1 We have perused the documents on record and considered the oral and written submissions made by the applicant and jurisdictional officer. 5.2 .......................... The applicant has raised three questions which are discussed and held as under: 5.3 Question No. 1 : Whether the GST would be payable on recoveries made from the employees towards providing canteen facility at subsidized rates in the factory and o....
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....ervices provided by the applicant to its employees cannot be considered as a "supply" under the relevant provisions of the CGST Act, 2017 and therefore the applicant is not liable to pay GST on the recoveries made from the employees towards providing canteen facility at subsidized rates. 5.4 Question No. 2 : Whether the GST would be payable on the recoveries made from the employees towards providing bus transportation facility? If yes, whether the Applicant is exempted under Notification No. 12/2017 Central Tax (Rate)? 5.4.1 The applicant has submitted that............... 5.4.2 In terms of section 7 of the Central Goods and Services Tax Act, 2017 (CGST Act), for a transaction to qualify as supply, it should essentially be made in the course or furtherance of business. We find that, the applicant is engaged in developing, manufacturing and marketing of pharmaceutical products. The provision of bus transportation facility to the employees is a welfare, security and safety measure and is not at all connected to the functioning of their business. Further, the said activity is not a factor which will take the applicant's business activity forward. ....
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....-116/2019-20/B-1 13, dated 16-12-2021] wherein the facts in respect of provision of transport facility are similar to the facts in the subject case and it has been held that, part recovery of amounts from employees in respect of the transport facility provided to them would not be treated as 'supply' as per provisions of GST Laws and therefore GST would not be leviable on the same. 5.4.8 Accordingly, we are of view that for the applicant, arranging bus transportation facility for their employees is definitely not an activity which is incidental or ancillary to the activity of developing, manufacturing and marketing of pharmaceutical products, nor can it be called an activity done in the course of or in furtherance of developing, manufacturing and marketing of pharmaceutical products as it is not integrally connected to the business in such a way that without this, the business will not function. Hence, it is held that, GST would not be payable on the recoveries made from the employees towards providing bus transportation facility." (Emphasis Supplied) (ii) Amneal Pharmaceuticals Pvt. Ltd., cited in 2021 (9) TMI 1293 (AAAR- GUJARAT) "FINDINGS:- ....
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....viable to Goods and Services Tax. 8. We observe that the GAAR has ruled that the Goods and Services Tax is applicable on the amount recovered from employees, mainly on the premises that the appellant is supplying food to its employees which would be covered under the definition of the term 'business' under Section 2(17) of the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017. However, the appellant has asserted before us that it is collecting the portion of employees ' share and paying to Canteen Service Provider, a third party, which is nothing but the facility provided to employees, without making any profit and working as mediator between employees and the contractor / Canteen Service Provider. Under these circumstances, we hold that the Goods and Services Tax is not applicable on the activity of collection of employees ' portion of amount by the appellant, without making any supply of goods or service by the appellant to its employees. 9. We, therefore, allow the appeal filed by the appellant M/s. Amneal Pharmaceuticals Private Limited and modify the Advance Ruling No. GUJ/GAAR/R/50/2020 dated 30.07.2020....
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....pective of the fact whether the employees are availing canteen facility or not. The canteen facility has been outsourced and run by a canteen contractor. As the appellant has arranged to provide the food to its employees at subsidized rate (and not free of cost), the appellant collects some portion of the total amount of food price to be paid to the 'Canteen Service Provider" from the employees, by deducting it from the salary of the employees. The appellant has submitted that it is only facilitating the supply of food to the employees, which is a statutory requirement under the Factories Act, 1948, and is recovering only employee's share towards actual expenditure incurred in connection with the food supply, without making any profit. 4. The appellant has referred to para 1 of Schedule III and states that it is part and parcel of employment contract between the employer and the employee. As such, it is services by an employee to the employer in the course of or in relation to his employment in accordance with clause 1 of Schedule-Ill of CGST Act which is neither a supply of goods nor a supply of services. As per section 7(2) of CGST Act, Schedule III supersedes Schedule I ....
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....sideration, such transactions are without involving any 'supply' from the appellant to its employees and is therefore not leviable to Goods and Services Tax. We observe that the MP A AR has ruled that the Goods and Services Tax is applicable on the amount recovered from employees, mainly on the premises that 'the appellant is supplying food to its employees', which would be covered under the definition of the term 'business' under Section 2(17) of the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017. However, the appellant has asserted before us that it is collecting the portion of employees' share and paying to Canteen Service Provider, a third party, which is nothing but the facility provided to employees, without making any profit and working as mediator between employees and the contractor / Canteen Service Provider. Under these circumstances, we hold that the Goods and Services Tax is not applicable on the activity of collection of employees' portion of amount by the appellant, without making any supply of goods or service by the appellant to its employees. 8. We, therefore,-allow the appeal filed b....
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....of the canteen charges are borne by Cadmach whereas the remaining part is borne by its employees. The said employees portion is collected by Cadmach and paid to the canteen service provider. Cadmach submitted that it does not retain with itself any pro fit margin in this activity of collecting employees' portion of canteen charges. We are not inclined to accord this canteen service facility provided by Cadmach to its employees to be an activity made in the course or furtherance of business, to deem it a supply by Cadmach to its employees. Thus, we pass the Ruling: RULINGS GST, at the hand of the Cadmach, is not leviable on the amount representing the employees portion of canteen charges which is collected by Cadmach and paid to the Canteen service provider..." Bus Transportation Facility: 8. It is submitted that since this is neither the business of the Applicant nor Applicant in the impugned case is providing Bus Transportation services (instead, 3rd party vendor is providing), this recovery, as per applicant's interpretation of law, also does not qualify as 'supply' in order to be covered under the ambit of GST law. 9. The applicant has relied upon ....
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....e CGST Act, 2017, as below: ....................... 16. From the details/documents provided by the party, we observe that the applicant is transferring the entire amount collected from their employees, to the third party vendor who is providing transport services to their employees. We also observe that the applicant, in his application, has informed that apart from subsidized amount collected from the employees, they are also adding up a considerable amount into it and then paying it to the third party vendor. The applicant is not retaining any amount collected from the employees towards said transportation charges. We further observe that the applicant is in the business of software development and staff augmentation services and not in the business of providing transport service. Rather, this is a facility provided to their employees under the obligation of Law of the Land. Moreover, this activity is not integrally connected to the functioning of their business. Also, the said activity is not a factor which will take their business activity forward. Accordingly, we are of the opinion that providing transport facility to its employees cannot said to be in furthe....
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....l not function. 20.1 Further, coming to the subsequent questions, we observe that the subsequent questions in the application apply only when the answer of first question is in affirmative. As we are of the view that arranging transport facility to its employee is not a supply of service, accordingly the remaining questions become redundant and merit no discussion." (Emphasis Supplied) (ii) DR Wilmar Schwabe (I) (P.) Ltd., cited in [2021] 133 taxmann.com 434(AAR - UTTAR PRADESH) - "DISCUSSION AND FINDING ................................................ 9. We observe that the applicant has sought advance ruling on the issue ,- (a) ...................... (b) Whether GST is applicable on amount recovered by the Applicant from employees for usage of bus transportation facility. (c) If ITC is available as per (a), whether it will be restricted to the extent of cost borne by the Applicant (employer). 18. The second question raised by the applicant is whether GST is applicable on nominal amount recovered by Applicants from their employees for usage of employee bus transportation facility in non-air conditioned b....
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....We have also considered the issue involved, on which advance ruling is sought by the applicant, relevant facts & the applicant's interpretation of law. 13. 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. 14. We find that the applicant has arranged a canteen facility for its employees, which is run by a Canteen Service Provider. As per their arrangement, part of the Canteen charges is borne by the applicant whereas the remaining part is borne by its employees. The said employees portion canteen charges is collected by the applicant and paid to the Canteen Service Provider. The applicant submitted that it does not retain with itself any profit margin in this activity of collecting employees' portion of canteen charges also do not charge any mark up therein. 14.1 The applicant vide letter dated 2-9-2022 has submit....
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....he facility. • Employee needs to notify HR and Admin team in case employee do not use this facility and commute for work on his/her own, in that case monthly recovery will be stopped from next payroll cycle. • > Any change of address in his/her tenure with FCB and SCB, to be informed to Admin. Based on the same a new pick-up point, if applicable, will be communicated by Admin. ANNEXURE • Declaration form for change in address 16. We observe that the applicant is providing transport and canteen facility to its permanent employees (on payroll) as per contractual agreement between employer employee relationships. 16.1 We find that CBIC vide Circular No. 172/04/2022-GST dated 06-07-22 has issued following clarification on the issue whether GST is leviable on the benefit provided by the employer to its employees in terms of contractual agreement entered into between the employer and the employee:- Clarification 1. Schedule III to the CGST Act provides that "services by employee to the employer in the course of or in relation to his employment" will not be considered as supply of goods or services and hence GST is not appl....