TaxTMI 
TaxTMI 
2023 (11) TMI 658
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....o the same provision under the TGST Act. Further, for the purposes of this Advance Ruling, the expression 'GST Act' would be a common reference to both CGST Act and TGST Act. 3. It is observed that the queries raised by the applicant fall within the ambit of Section 97 of the GST ACT. The Applicant enclosed copies of challans as proof of payment of Rs. 5,000/- for SGST and Rs. 5,000/- for CGST towards the fee for Advance Ruling. The Applicant has declared that the questions raised in the application have neither been decided by nor are pending before any authority under any provisions of the GST Act. The application is therefore, admitted. 4. Brief facts of the case and averments of the applicant: 4.1 The applicant M/s. Kirby Building Systems & Structures India Private Limited, Sangareddy are into the manufacture & supply of pre-engineered buildings and storage racking systems. The applicant averred that they are providing canteen and transportation facilities to its employees at subsidized rates as per the terms of the employment agreement entered between the applicant and the employee. The applicant provided copies of employment agreement in Annexure-3 to the application....
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.... and the cost incurred by the applicant pertaining to the transport facility provided to its employees is the expenditure incurred by the applicant in terms of the contract between the employer and employee. Therefore that the applicant is eligible for the input tax credit on the tax paid on hire of such vehicles. 4.2 Company Background: Kirby Building Systems is a 100% subsidiary of Kuwait- based Alghanim Industries. Kirby's product list consists of pre-engineered steel buildings (PEB) applicable for factories, warehouses, metro rails, supermarkets, aircraft hangars, sports stadiums, auditoriums, etc. Other products include structural steel, sandwich panels, storage solutions, Kirby Roof (KR), Kirby Wall (KW), Kirby Deep Decking Panel and Kirby Standing Seam Panel (KSS-600). 5. Questions raised: 1. Whether GST is liable to be discharged on the recoveries being made by the applicant from its employees towards the canteen and transportation facilities provided to them? 2. Whether the applicant is eligible to avail input tax credit in respect of the GST paid on inward supplies used for providing canteen and transportation facilities? 6. Personal Heari....
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.... Provided that, where the canteen is managed by a Worker's Co-operative Society in accordance with the provisions of sub-rule (6) of Rule 70, such society may be allowed to include in the working charges to be incurred for the food, the food stuff served, a profit up to five per cent on its working capital employed in running the canteen. (2) In computing the prices referred to in sub-rule (1) the following items of expenditure shall not be taken into consideration, but will be borne by the occupier (a) the rent for the land and building; (b) the depreciation and maintenance charges of the building and equipment provided for the canteen; (c) the cost of purchase, repairs and replacement of equipment including furniture, crockery, cutlery, and utensils; (d) the water charges and expenses for providing lighting and ventilation (e) the interest for the amount spent on the provision and maintenance of the building, furniture and equipment provided for the canteen; (f) the cost of fuel required for cooking or for heating stuffs or water; and (g) the wages to the employees servicing of the canteen and the cost o....
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....cussion & Findings: 9.1 Canteen Services: M/s. Kirby Building Systems & Structures India Private Limited, Sangareddy contended that they are obligated to provide canteen facility to their employees under Section 46 of the Factories Act, 1948 and also under the contractual obligation entered with the employees at clause 8.3 of the copy of the employment agreement provided by them. 9.2 The Section 46 of the Factories Act, 1948 prescribes for maintaining the canteens by factories as follows: "Canteens- (1) The State Government may make rules requiring that in any specified factory wherein more than two hundred and fifty workers are ordinarily employed, a canteen or canteens shall be provided and maintained by the occupier for the use of the workers." As seen from the above statutory provisions of the Factories Act, 1948, the factories with a specified number of employees are mandated to provide and maintain a canteen for such employees. 9.3 Clarification on various issues of section 17(5) of the CGST Act as per point no.3 of Circular No. 172/04/2022-GST dated 6 th July, 2022 issued by CBIC is produced below: Whether the proviso at the end of c....
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....vices 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 a club, health and fitness centre; and (iii) travel benefits extended to employees on vacation such as leave or home travel concession: Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force.] 9.5 As per Section 17(5)(b) of CGST/TGST Act' 2017 input tax credit in respect of such canteen facilities shall be available, where it is obligatory for an employer to provide the same to its employees under Factories Act, 1948 being in force. The same is clarified by Circular No. 172/04/2022-GST dated 6^th July, 2022. As stated by the taxpayer he is a registered unit under Factories Act, 1948. 9.6 Perquisites provided by employer to the employees as per contractual agreement as per point no. 5 of Circular No. 172/04/2022-GST dated 6th July, 2022 is produced below: Whether various perquisites ....
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....les 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) vessels and aircraft except when they are used-- (i) for making the following taxable supplies, namely:- (A) further supply of such vessels or aircraft; or (B) transportation of passengers; or (C) imparting training on navigating such vessels; or (D) imparting training on flying such aircraft; (ii) for transportation of goods; (ab) services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa): Provided that the input tax credit in respect of such services shall be available- (i) where the motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) are used for the purposes specified therein; (ii)....
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....urer of transportation of its employees, from their designated pick up points to their workplace, by Bus, would amount to a service for personal use or consumption of any of the employees?" 2. Whether the activity of providing bus transport services to its employees, at the cost of the Manufacturer, to reach factory in time and the expenses incurred by the Manufacturer in providing such service, (which amount is taken into consideration, while determining the final price of the product) can be said to be a component leading to the manufacturing activity, so as to entitle the Manufacturer, the benefit of Cenvat Credit ? The view held by Hon'ble High court is produced below: "The transportation of employees from distance of about 40 kms for reaching factory is not an activity which could be said to be a part of manufacturing activity. It is merely for personal convenience of the employees to enable them to reach the premises of the factory so as to thereafter participate in the manufacturing activity. In this regard, the reliance is placed on the judgment of the Karnataka High Court in Toyota Kirloskar Motor Private Limited vs THE COMMISSIONER OF CENTRAL....
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....ion which makes the applicant ineligible to avail input tax credit on the invoices issued to him by the transporter for transportation of employees as per Section 2(60) of CGST/TGST Act' 2017 read with Section 17(5)(g) of CGST/TGST Act' 2017. 10. In view of the foregoing, the ruling is given by Central Member as under: Questions Ruling 1. Whether GST is liable to be discharged on the recoveries being made by the applicant from its employees towards the canteen facilities provided to them? The perquisites provided by the employer, canteen services in the present case, to their employees in terms of the contractual agreement between the employer and his employees as submitted by them, are in lieu of the services provided by them to their employees in relation to employment. Therefore the perquisites provided by the employer to the employee, in terms of contractual agreement, will not be subjected to GST. However if the employer makes taxable supply of canteen services to employees by charging consideration for the purpose of business, instead of providing them as a perquisite, the same will be subject to payment of GST, at prescribed rates, as per provisions of CGST/TG....