TaxTMI 
TaxTMI 
2023 (12) TMI 507
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the Act, where the Authority finds that advance ruling pronounced by it under sub-section (4) of Section 98 or under sub-section (1) of section 101 has been obtained by the applicant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the applicant as if such ruling had never been made. 5. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act. M/s. Sundaram Clayton Limited, Auto Ancillary, SEZ, AA5, VI Avenue, Mahindra World City, Natham, Kanchipuram, Chennai 603002 (herein after referred to as The Applicant'), are registered with GST and hold GSTIN 33AAACS4920J2ZI. The Applicant is engaged in the manufacture and supply of die-casting parts ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... * The first requirement is that there should be a legal intention and agreement between the parties to supply and receive goods or services or both. The absence of such intention would not amount to 'supply' within its meaning under the CGST Act and in this regard reliance was placed on judgement of European Court of Justice in the case of R.J. Tolsma V Inspecteur Omzetbelasting Leewarden in the case C-16/93. * There is no legal intention between them and the workers to provide canteen services for a consideration, but it is only a statutory obligation under the Factories Act; There is no actual agreement between them and the workers with a positive act for consideration; The mention of provision of canteen facility in the HR policy and the Wage Agreement with employees cannot be called an agreement entered into by the parties to provide/avail canteen facility; The HR policy and the Wage Agreement merely specifies the facilities that are available to the workers, which are common to all and hence cannot be equated with an agreement to supply goods or services. * The second requirement is the presence of 'consideration' against the supply; If an activity is undertaken but there....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ase of Tata Motors Limited[GST-ARA-23/2019-20/B-46 dated 25.08.2020]. * In case GST is applicable on the recovery of canteen charges, the same should be restricted to the value of charges actually collected from workers. A combined reading of the Circular cited supra and meaning of the term 'perquisite' as per Section 17(2) of the Income Tax Act, 1961, it emerges that the intention of the Circular is to clarify that GST is not applicable on a perquisite which is part of the employment agreement and which may be free of cost for the employees; Consequently, in case where a recovery is made against a supply, the same may be subject to GST; Regarding recoveries from workers other than employees, it is an unrelated party transaction and therefore GST can apply on the transaction value only. In this regard, reliance is placed on TNAAR ruling in the case of M/s Kothari Sugar and Chemicals Limited [No. 20/AAR/2022 dated 31.05.2022]. 3.1. The Applicants were offered personal hearing on 23.08.2023, wherein Shri. Kulraj Ashpnani and Mr. Arun Fatela, Chartered Accountants (Authorised Representatives -AR) appeared for the Applicant and reiterated the submissions made in the application. He ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sites are not subjected to GST; But the Applicant has mentioned in their application that there is no actual agreement between the Applicant and the workers. Therefore provision of canteen facility would be subjected to GST. * There are no pending proceedings in the Applicant's case on the issue raised in the application. 4.2. The Applicant's jurisdictional State Authority has not submitted any remarks and hence it is presumed that there are no pending proceedings in the Applicant's case on the issue raised in the application. DISCUSSION AND FINDINGS: 5.1. We have considered the submissions made by the applicant in their application for advance ruling and the submissions made by their AR during the course of personal hearing and additional submissions made thereon with reference to the issues involved and relevant facts. 5.2. Before moving further, we have to determine the admissibility of the application. In terms of Section 97(2) of the CGST/TNGST Act, Question which advance ruling is sought under the Act, falls within the scope of Section 97(2)(e) & (g) of the CGST/TNGST Act, 2017, and therefore the application is admissible. 5.3. The Applicant has raised the following qu....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Settlement dated 26.10.2020 entered into between the Management of Sundaram Clayton Ltd and the workmen of SCL - MCW, wherein at point No. 22, a mention is made that canteen recovery of Rs. 5/- per day remains unchanged. 6.2. From the above, we find that Applicant provides canteen facility and is providing meals/food at concessional rates, i.e., no meal is extended free and specified amount in respect of the food consumed by the employee are collected by the Applicant against such consumption of food. Further, as seen from the documents furnished i.e. appointment order, availing the canteen facility made available by the Applicant in their premises is not mandatory. With the above facts, the question sought on the liability to pay GST on the amount collected by the employees is taken up. 7.1. Firstly, the first part of the question i.e. whether recovery of subsidised value from employees for providing canteen facility would amount to 'supply' under the CGST Act, is taken up. It is the contention of the Applicant, that canteen has been established as required under the Factories Act. Factories Act, 1948 on providing the facility of Canteen, states as follows:- 46. Canteens. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ertain running cost while collecting the nominal rate as fixed by the Managing Committee, which is an activity in furtherance of their business. 7.3. The term 'Outward supply', is defined in Section 2(83) of the CGST Act, 2017, as below: 'Outward Supply' in relation to a taxable person, means supply of goods or services or both, whether by sale, transfer, barter, exchange, license, rental, lease or disposal or any other mode, made or agreed to be made by such person in the course or furtherance of business". Thus supply made by a taxable person in the course or furtherance of business is an 'Outward supply'. It has been brought out above, that establishing canteen is in the furtherance of business of the Applicant. Thus, the provision of food in the canteen for a nominal cost is a 'Supply' for the purposes of GST. Here, the Applicant has relied on a judgment of European Court of Justice regarding the issue of 'supply of service'. We find that this judgment has no relevance as case in hand is dealt in Indian laws. 7.4. It was also the contention of the Applicant that the amount received from the employees is in the nature of reimbursement of the cost incurred by the Applicant a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Appellant had established the canteen in their premises and has been bearing a part of the cost for providing the food/beverages to their employees and a part of the cost is being collected from employees, by adopting subsidized rates. The supply of the food/beverages, although at subsidized rates, by the Applicant to their employees is certainly an activity amounting to supply of service and attracts levy of GST on that part of the consideration being charged for such supply. The supply of food by the employer, i.e, the applicant to their employees is composite supply of food held as 'Supply of service' as per Schedule-II of the GST Act and the amount collected by the Applicant is a 'Consideration' on which GST is liable to be paid. 7.6 Reliance was placed by the Applicant in the cases of Hon'ble High Court's decision in the case of The Indian Institute of Technology, Kalyanpur, Kanpur V the State of Uttar Pradesh and Ors [1976 (38) STC 428(A11), which pertains to leviability of Sales Tax, which is not the case in hand. The other case law viz. Panacea Biotech Ltd V Commissioner of Trade & Others [2012 (12) TMI 826 (Delhi High Court)], which the Applicant has relied, wherein the....