TaxTMI 
TaxTMI 
2023 (12) TMI 507
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....ce ruling have changed. 4. In terms of Section 104 of 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 ....
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.... ingredients:- (a) Supply of goods or services (b) Such supply is made or agreed to be made for a consideration; and (c) Such supply should be for furtherance of business. • 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 worker....
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....rvices; Reliance is placed on Circular No. 172/04/2022-GST dated 06.07.2022, wherein it was clarified that perquisites provided by the employer to its employees in terms of contractual agreement will not be subjected GST. • Reliance is placed on Maharashtra Advance Ruling Authority's order in the case 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....
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.... 2 of the CGST Act, 2017; Regarding valuation, since the employer and employee are related persons as per Section 15 of CGST Act 2017, the provisions of Section 15(4) will apply and accordingly the value of supply shall be determined under Rule 28 and 30 of CGST Rules, 2017. • Further, the Board's Circular No. 172/04/2022-GST dated 06.07.2022 mentions about contractual agreement entered into between the employer and the employee, so that perquisites 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....
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....n respect of the employee at M/s Sundaram Clayton, Mahindra World City (SCL-MWC) unit was furnished. On perusal of the employee appointment order dated 13.12.2022 furnished in respect of Shri V Balakrishnan, it is seen that at point no. 18, it was mentioned that the employee will be entitled to use the canteen facility within the Factory premises as mandated under the Factories Act, 1948 and the Company will recover charges on a subsidized basis for availing the canteen facility. The Applicant also furnished a Memorandum 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 man....
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....iary benefit: (b) any activity or transaction in connection with or incidents or ancillary to sub-clause (a);. In the case at hand establishing a canteen facility in the unit is an activity incident to the running of their business. Factory Act, above mandates establishing canteen, bearing certain mandatory costs in running of the canteen by the employer in as much as the number of workers 'ordinarily employed' (workers & contract labourers) are above 250 per unit, which is the case in hand as per their submissions. Accordingly, the applicant has established the canteen in their premises and bears certain 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....
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.... facility. Hence, we find that reliance the said case law in their favour is of no avail. 7.5 The Schedule II to the CGST/SGST Act, 2017 describes the activities to be treated as supply of goods or supply of services. As per clause 6 of the Schedule, the following composite supply is declared as supply of service:- "Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is-for cash, deferred payment or other valuable consideration." In the instant case, the 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 ....
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.... will be entitled to use the canteen facility within the Factory premises as mandated under the Factories Act, 1948 and the Company will recover charges on a subsidized basis for availing the canteen". We find that there exists an express mention in the terms of agreement between the Applicant and the employees. 7.9 At this juncture, we find that it is pertinent to see the definition of the term 'Perquisite'. As per Section 17(2) of the Income Tax Act, 1961, "Perquisite" is defined as,- "any casual emolument or benefit attached to an office or position in addition to salary or wages." Thus a 'perquisite' is a non-cash benefit attached to an office or position which is in addition to salary or wages. Generally, such perquisites being a part of the salary or Cost to Company of the employee are free of cost i.e. the employee does not pay anything additional for a perquisite. 7.10 A combined reading of the Circular and the term 'perquisite', we find that the intention of the Circular is to clarify that tax is not applicable on perquisite which is part of the employee agreement and which may be free of cost for the employees. Accordingly, in case where a recovery is made aga....