TaxTMI 
TaxTMI 
2023 (4) TMI 298
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....e use of its employees. 4. Since the factory premises is located far away from the city limits, the applicant provides canteen facility by appointing a canteen service provider [ for short - CSP]. The employees are issued an ID card while joining which can be used to avail this canteen facility. They are charged only for the days on which an employee has punched his ID card and a pre-determined percentage is deducted from the salary payable to the respective employee. The facility is tabulated below for ease of reference: Sr. No. Type of employee Mode of availing facility Basis of recovery Mode of recovery Book treatment ITC availment GST payment 1 Full time employees [at factory and corporate office]. ID card or biometric. Based on consumption Subsidized value Amount deducted from employee is credited to canteen expense account. Amount charged by CSP is booked as an expense in P&L A/c. No ITC is being availed GST is paid @ 5% on the basis of no. of punches in the system on the value charged by the CSP. 5. The applicant has further set up the canteen facility in a demarcated area within its factory premises & also at their corpo....
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....of the Factories Act; • that the applicant merely provides a demarcated space ; • that the supply is by the CSP to the employees & not from the CSP to the applicant; • that no GST is to be levied on the third party canteen charges collected by employer from employee; • that they wish to rely on the below mentioned case laws/rulings,- [a] Amneal Pharmaceuticals P Ltd [TS-569-AAAR (Guj)-2021-GST] [b] Troika Pharmaceuticals Ltd [Advance Ruling no. Guj/GAAR/R/22/38] [c] Cadila Healthcare [Advance Ruling Guj/GAAR/R/22/19] [d] Dishman Carbogen Amcis Ltd [Advance Ruling Guj/GAAR/R/22/2021] [e] Dakshina Kannada Coop Milk Producers Union Ltd [2021 (8) TMI 352] [f] R J Tolsma vs Inspecteur der Omzetbelasting Leewarden (C-16/93 (judgement of sixth Court, sixth chamber) [g] Bai Mumbai Trust [Commercial suit (I) MP/ 236/2017] [h] IIT [1976(38) STC 428 (All); [i] University of Delhi [AIR 1963 SC 1873] [j] Cricket Club of India [AIR 1969 SC 276] [k] TATA Motors Ltd [GST-ARA-23/2019-20/B-46] [l] TATA Power Company Ltd [GST-ARA-99/2019-20/B-....
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....der any law for the time being in force; • that in terms of Troikaa Pharmaceuticals Ltd [Guj/GAAR/R/2022/38] and Hindustan Coca Cola Beverages P Ltd [2014-TIOL-2460-CESTAT-Mum] there is no doubt that a taxpayer is allowed to avail ITC on procurement of food & beverages when the same is made under any existing and enforceable law; that the provision of canteen facility is not made out of the free will of the applicant & is provided solely on account of a statutory obligation case on the applicant. 9. The applicant has filed this application for advance ruling to ascertain the GST implication on the existing arrangement of canteen facility being provided to all the employees at the factory and the corporate office of the applicant. Vide the aforesaid application, the applicant has raised the following question for advance ruling viz,- (i) Whether the subsidized deduction made by the applicant from the employees who are availing food in the factory/corporate office would be considered as a 'supply' under the provisions of section 7 of the CGST Act, 2017 and the GGST Act, 2017? (ii) If yes, whether GST is applicable on the amount deducted from ....
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....activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration. Explanation .-For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another ;} (b) import of services for a consideration whether or not in the course or furtherance of business; ^2[****] and (c) the activities specified in Schedule I, made or agreed to he made without a consideration; ^3[****] (d) ^4[*****] ^5[(1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall he treated either as supply of goods or supply of services as referred to in Schedule II.] (2) Notwithstanding anything contained in sub-section (1),- (a) activities or....
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....e 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 therefrom 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 he 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). • Circular No. 172/04/2022-GST S.No. Issue Clarification 3. Whether the proviso at the end of clause (b) of subsection (5) of section 17 of the CGST Act is applicable to the entire clause (b) or the said proviso is applicable only to sub-clause (iii) of clause (b)? 1. Vide the Centr....
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....ed in terms of the contract between the employer and employee. Factory 15. The facts having been enumerated supra we do not intent to repeat the same for the sake of brevity. 16. The first issue to be decided is whether the subsidized deduction made by the applicant from the employees who are availing food in the factory/corporate office would be considered as a 'supply' under the provisions of section 7 of the CGST Act, 2017. Now, in terms of Section 7 of the CGST Act, 2017, supply means all forms of 'supply' of goods/services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. The exception being Schedule I, which includes the activities made or agreed to be made without a consideration and Schedule III, which includes activities which shall be treated neither as a supply of goods or services. The applicant's case is that they employ 2745 persons who are full time employees and who have been provided with canteen facility in terms of section 46 of the Factories Act, 1948. We find that the applicant is paying GST @ 5% in ....
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....t sections of the Factories Act, 1948 viz (m) "factory " means any premises including the precincts thereof,- (i) whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or (ii) whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on.- but does not include a mine subject to the operation of 5 [the Mines Act, 1952 (35 of 1952)], or 6 [a mobile mobile unit belonging to the armed forces of the Union, railway running shed or a hotel, restaurant or eating place]. On going through the website of the applicant https ://www.cadilapharma.com, the Corporate Office of the applicant is situated at Sarkhej-Dholka Road, Bhat, Ahmedabad, India, 382210. The factory of the applicant is located at Ankleshwar, Dholka, Kadi. The corporate office of the applicant is not located within the precincts of the factory. However, the co....
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....s. Hence, in terms of the clarification issued by the Board vide Circular No. 172/04/2022-GST, at para 5, we hold that the subsidized deduction made by the applicant from the employees who are availing food in the Corporate Office would not be considered as a 'supply'' under the provisions of section 7 of the CGST Act, 2017. 20. Again, since the answer to the above is not in the affirmative, the ruling sought in respect of the second and the third question is rendered infructuous. Input Tax Credit 21. The next question on which the applicant has sought ruling is whether Input Tax Credit of GST charged by the CSP would be eligible for availment by the applicant. In this connection, before proceeding further, certain factual aspects which we would like to mention, though at the cost of repetition are viz,- • that they employ 2745 full time employees working on permanent basis at their factory and the corporate office; • that section 17(5)(b) ibid, was amended on 1.2.2019, and is reproduced supra', • that the applicant is mandated vide section 46 of the Factories Act, 1948 to provide canteen facility to its employees with....