TaxTMI 
TaxTMI 
2023 (4) TMI 203
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....GST Act respectively) by M/s. Brandix Apparel India Private Limited (hereinafter referred to as applicant), registered under the AP Goods & Services Tax Act, 2017. 3. Brief Facts of the case: 3.1 M/s Brandix Apparel India Private Limited (hereinafter referred to as "applicant") Is engaged the business of manufacture of apparels and export of the same outside India. Applicant is having GST Registration number 37AACCB6569L1Z5. 3.2 The applicant has hired a third-party contractor for providing canteen services to the employees in the factory. The third-party contractor raises an invoice on the company for provision of canteen services and recovered amount form the employees for provisions canteen facility. The total amount charged by the canteen service provider per employee per month is Rs.1,538.25/-. Out of the total canteen expense Rs.578/- - is recovered from each employee per month and the applicant bears the cost of balance INR 960.25 per month per employee. 3.3 The applicant has hired a contractor for providing transportation services to the employees of the company transport services per employee per month. The total amount charged by the bus transport service per ....
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.... and services in connection with commencement of 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 by a person as the holder of an office which has been accepted by him in the course of furtherance of his trade, profession or vocation; h) activities of a race club including by way of totalisator or a license to book maker or activities of a licensed book maker in such club; and i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities; B) The applicant submits that the above definition, the term business broadly means any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity whether or not it is for pecuniary benefit. C) The applicant in the present case is engaged in the business of manufacture of apparels and not in the business of providing canteen facility. However,....
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.... April 2022. "...We are not inclined to accord this canteen service facility provided by M/s Cadila to its employees to be an activity made in the course or furtherance of business to deem it a Supply by M/s Cadila to its employees. We pass the Ruling: GST, at the hands of the M/s Cadila, is not leviable on the amount representing the employees' portion of canteen charges, which is collected by M/s Cadila and paid to the Canteen service provider" We find that M/s Cadila has arranged a canteen for its employees, which is run by a Canteen Service Provider. As per their arrangement, part of the Canteen charges is borne by MI s. Cadila whereas the remaining part is borne by its employees. The said employees' portion canteen charges is collected by M/s. Cadila and paid to the Canteen Service Provider. M/s. Cadila submitted that it does not retain with itself any profit margin in this activity of collecting employees' portion of canteen charges. The applicant submits further that the Madhya Pradesh Appellate Authority of Advance Ruling has also taken a similar view in the case of M/s Bharat Oman Refineries Limited [Order No. MP/AAAR/07 /2021 date....
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....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." The Gujarat Authority of Advance Puling has taken a similar stand in the Case of M/s Dishman Carbogen Amcis Ltd, (GUJ/GAAR/R/22/2021 dated 9 July 2021], The relevant extract is as below; "We have carefully considered all the submissions made by the applicant. We find that the applicant has arranged a canteen for its employees, which Is run by a third party 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 c....
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....workers. Hence, the activity of recovery of canteen charges from employees would not be a supply under GST, In addition to the above, recovery made from the employees is towards for supply of food which is solely to comply with the mandate under Factories Act. Basis the above it can be inferred that when any service is provided by employer to employee which becomes part of the cost to company then such services can be said to be provided under employer-employee relationship and would be outside the purview of GST. Once employee ceases to be in employment with Applicant, he/she is not authorized to use the canteen facility. In other words, employer-employee relationship is must to avail this facility. b) The Applicant would like to rely on the judgement by the Andhra Pradesh High Court in the case of M/s Bhimas Hotels Pvt Ltd. vs the Union of India, Ministry of Finance [2017 (4) TMI 860] under the Service Tax regime wherein the High Court had held that food supplied by an employer to its employees at a subsidized rate forms part of the wages under the Industrial Disputes Act, 1947 and should not be taxable as a service, The relevant extract of the judgement has been highlig....
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.... "Applicant has submitted that they issue pass only to their employees, so that the transportation facility can be used by such employees, for which amount is recovered on monthly basis. They have also submitted that once, employee ceases to be in employment with Applicant, he/she is not authorized to use the transportation facility. In other words, employer-employee relationship is must to avail this facility.... In the subject case, the transaction between the applicant Ft their employees, due to "Employer-Employee" relation as stated by the applicant in their submissions, is not a supply under GST Act. To answer the second question we now refer to Schedule III to the CGST Act which lists activities which shall be treated neither as a supply of goods nor a supply of services As per clause 1 of the said Schedule-Ill, Services by an employee to the employer in the course of or in relation to his employment shall he treated neither as a supply of goods nor a supply of services. Since the applicant is not supplying any services to its employees, in view of Schedule III mentioned above, we are of the opinion that GST is not applicable on the amounts recovered by Applicants fr....
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....ort facility to its employee is not a supply of service, accordingly the remaining questions become redundant and merit no discussion." In the present case, the Applicant submits it is not engaged in the business of bus transportation neither there is any profit element in the recovery made from employees and accordingly, the said facility provided by the Applicant to its employees cannot be said to be made in the course or furtherance of business. Therefore, the above advance rulings are squarely applicable to our instant case. In light of the above submission, we pray for the following to hold that GST is not payable on canteen and bus transportation recovery made from employees. The Applicant request you to grant personal hearing, further, the Applicant craves leave of your goods self to any additional submissions during and before personal heating. 6. Personal Hearing: The proceedings of Personal Hearing were conducted on 11.01.2023, for which the authorized representative, Rajitha B, partner attended and reiterated the submissions already made. 7. Discussion and Findings: We have considered the submissions made by the applicant in their application for Advanc....