TaxTMI 
TaxTMI 
2023 (7) TMI 142
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....ies Act, 1948. The applicant has appointed CSP, who is responsible for providing skilled manpower for the preparation of food and maintenance of canteen premises. 4. Being a part of TACO, policies set out by them are applicable group entities. TACO has set out Tata AutoComp Systems Ltd Transport Policy, which states that the canteen policy is applicable to all its group entities. TACO has set out Tata AutoComp Syestms Ltd. Canteen and Transport Policy, which states that the canteen policy is applicable in all employees on the rolls of the Company ie Management staff, staff, workmen, trainees, temporary, etc in Tata AutoComp Systems Ltd and its group entities based in India. They have also specifically reproduced paras 5.01 and 5.02 of their Canteen policy. 5. The applicant has also relied upon the provisions of memorandum of settlements entered into with Tata AutoComp Systems Kamdar Sangh Sanand which states that for employees availing the canteen facility, the applicant shall deduct Rs. 500/- per month from their salary except for contract employees. This deduction finds a mention in their respective salary slip also. 6. The canteen facility is provided at a nominal rate ....
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....ations under Factories Act; that the restriction imposed u/s 17(5), ibid is not applicable in the instant case since the canteen facility is extended to its employees as a part of its statutory obligations under the provisions of Factories Act; o that they would like to rely on the below mentioned rulings/circular which substantiate their averment that no GST is leviable; • Bharat Oman Refineries [MP/AAAR/7/2021] • Hindustan Coca Cola Beverages P Ltd [Appeal No. E/89199/2013] • Cema Electric Lighting Products India P Ltd [Appeal No. E/787/2012] 8. The applicant has further entered into a contract with TSP to provide transportation facility to its employees between the factory premises & the residence in non air conditioned buses having capacity of more than 13 persons. This facility is offered only to employees of the Company. Employees are required to display company issued ID card to board the bus & avail the facility TSP according to the pre approved routes provide the services to the employees. The applicant has further enclosed the transport policy as Annexure 3 and the copy of the agreement with the TSP as Annexure 6. 9. T....
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.... highlighting various terms and condition of employment such as job band, designation, date of appointment, place of posting etc and the salary structure and the terms and condition governing the employment. In terms of the said agreement, where an employee fails to serve the specified notice period or serves a shorter tenure, the applicant deducts an amount equivalent to salary for the tenure of notice period not served as a compensation for the breach of the terms of the employment agreement by the employees in accordance with the appointment letter. This amount of notice pay is deducted from full and final settlement of the employee and is not collected as a separate payment from the employee. Further it is deducted to discourage the employees from serving a shorter period and is in a nature of damages for breach of the terms of employment agreement by the employee. 11. The applicant's contention is that they are not liable to pay GST on notice pay owing to the following reasoning viz • that on account of the employment contract, they have a right to deduct an amount from the full & final settlement in lieu of the notice pay, enabling the employee to exit the com....
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....udgments cited in the application. In respect of canteen service provider they informed that the issue remains settled. In respect of transportation recovered it was informed that they have hired the bus. On being asked they informed that there is no legal obligation. For ITC they relied on the 28^th GST Council Meeting. Regarding notice pay they believe it is not a supply and relied on a CBIC circular. Discussion and findings 14. At the outset, we would like to state that the provisions of both the CGST Act and the GGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the GGST Act. 15. We have considered the submissions made by the Applicant in their application for advance ruling as well as the submissions made during the course of personal hearing. We have also considered the issue involved, the relevant facts & the applicant's submission / interpretation of law in respect of question on which the advance ruling is sought. 16. Before adverting to the submissions made by the applicant, we would like to repr....
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.... (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: (aa)... ... ... .....: (ab) ... ... ... .....: (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....
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.... under any law for the time being in force." 2. The said amendment in sub-section (5) of section 17 of the CGST Act was made based on the recommendations of GST Council in its 28^th meeting. The intent of the said amendment in sub- section (5) of section 17, as recommended by the GST Council in its 28^th meeting, was made known to the trade and industry through the Press Note on Recommendations made during the 28^th meeting of the GST Council, dated 21.07.2018. It had been clarified "that scope of input tax credit is being widened, and it would now be made available in respect of Goods or services which are obligatory for an employer to provide to its employees, under any law for the time being in force." 3. Accordingly, it is clarified that the proviso after sub-clause (iii) of clause (b) of sub-section (5) of section 17 of the CGST Act is applicable to the whole of clause (b) of sub-section (5) of section 17 of the CGST Act. 5. Whether various perquisites provided by the employer to its employees in terms of contractual agreement entered into between the employer and the employee are liabl....
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....that perquisites provided 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 when the same are provided in terms of the contract between the employer and employee. We find that factually there is no dispute as far as [a] the canteen facility is provided by the applicant as mandated in Section 46 of the Factories Act. 1948 is concerned; and [b] the applicant has provided a sample copy of the employment agreement and a copy of Canteen and Transport policy of Tata AutoComp Systems Ltd, the relevant paras of which is reproduced below viz 05. Canteen 05.01 Canteen facility will be provided to all the employees in all the shifts in each Manufacturing/Engineering Business Unit at each location, wherever it is feasible to do so, on the basis of number of employees. The canteen services should be managed through a canteen contractor only. No cooking facility will be provided in the premises of the Business Unit/Plants. Adequate facilities for dining hall, serving of food & proper washing/maintenance & storage area will be provided by the BU/Plant Administration. 5.0....
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....ad. 23. In view of the foregoing, we hold that Input Tax Credit will be available to the appellant in respect of canteen facility which is obligatory under the Factories Act, 1948, read with Gujarat Factories Rules, 1963. Transportation 24. The second issue to be decided is whether the services by way of non air conditioned bus transportation facility provided by the TSP is supply of service by the applicant to its employees under the provisions of section 7 of the CGST Act, 2017. What section 7 encompasses is mentioned supra in para 18. 25. The applicant's contention is that since they are situated in a remote location outside city limits where transport is scarce, for the convenience and safety of employees to reach/leave the factory & ensure that there is no disruption to business they have engaged contractual TSP to provide transportation services to its employees. 26. Now in terms of Circular No. 172/04/2022-GST, it is clarified that perquisites provided 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 when the same is provided in terms of the contract between t....
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....refore, we are of the opinion that the applicant is eligible for ITC however subject to the condition that the buses they have hired is more than 13 seater, wef 1.2.2019. Our view is substantiated by the ruling in the case of M/s. Tata Motors Limited [GST-ARA- 23/2019-20/B- 46], Dr. Willmar Schwabe (I) P Ltd 12021 133 taxmann.com] and Emcure Pharmaceuticals Ltd [GUJ/GAAR/R/2022/22] 30. It is further held that the ITC on GST charged by the TSP will be restricted to the extent of cost borne by the appellant only taking the analogy from the ruling of the GAAAR vide its order No. GUJ/GAAAR/Appeal/2022/23 dated 22.12.2022 in the case of M/s. Tata Motors Ltd, Ahmedabad. Notice pay 31. The third issue of the applicant is about notice pay, wherein the applicant is of the view that deduction of the amount equivalent to salary for the tenure of notice period not served as a compensation for the breach of the terms of the employment agreement by the employees in accordance with the appointment letter is not leviable to GST. 32. We find that the issue has already been clarified vide Circular no. 178/10/2022-GST dtd 3.8.2022, wherein it is stated as follows: Forfeiture of s....