TaxTMI 
TaxTMI 
2023 (12) TMI 723
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....nce 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, 12, Chaitanya, Khader Nawaz Khan Road, Nungambakkam, Chennai 600006 (herein after referred to as The Applicant'), are registered with GST and hold GSTIN 33AAACS4920J1ZJ. The Applicant is engaged in the manufa....
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....I - Canteen run by a third party (Oragadam and Hosur) -Applicant avails canteen services from its subsidiary company namely Sundaram Auto Components Limited (SACL). There is a common canteen for food preparation operated by SACL. After the food is prepared, SACL sends the food to the Applicant's dining area within the Applicant's plant. SACL recovers charges for the canteen facility provided to the Applicant's workers and the Applicant in turn recovers subsidized amount from its workers. • They recover a subsidized amount from the workers, as given below, and the remaining cost is borne by them. Plant Location Type of worker Recovery per month/day Padi (own canteen) Regular 25 per month Trainee 25 per month Contractors Rs. 15 or 30/per day Oragadam (SACL) Regular Rs. 5 per day Trainee Rs. 5 per day Security Rs. 15 per day Contractors Rs. 30 per day Hosur (SACL) Regular Rs. 5 per day Trainee Rs. 5 per day Contractors Rs. 15 per day 2.3. In their interpretation of law/facts in respect of the questions raised, the Applicant submitted that - • The subsidized amount col....
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....39; and hence GST not leviable. • The last requirement for a transaction to qualify a 'supply' is for it to be in course of furtherance of business. The activity of providing canteen facility does not fall under any of the clauses of the definition of 'business'. Their main business is manufacture and supply of die-casting parts and provision of canteen facility is not incidental or ancillary to their main business. Therefore, taxability under Schedule I also fails. • In this regard, reliance was placed on the following case laws:- i. The Indian Institute of Technology, Kalyanpur, Kanpur V the State of Uttar Pradesh and Ors [1976 (38) STC 428(All). ii. Panacea Biotech Ltd V Commissioner of Trade & Others [2012 (12) TMI 826 (Delhi High Court)] iii. Emcure Pharmaceuticals-Maharashtra AAR [AAR No. GST-ARA-119/2019-20/B-03 dated 04.01.2022] iv. Muashi Auto Parts India Pvt. Ltd. - Haryana Appellate AAR [HAAR/2020-21/06 dated 25.09.2020] v. North Shore Technologies Pvt Ltd. 2021(49) GSTL 315(AAR-GST-UP). • Subsidised food is a perquisite to employees(excluding contractors) forming a part o....
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....Arun Fatela, Chartered Accountants (Authorised Representatives -AR) appeared for the Applicant and reiterated the submissions made in the application. He submitted copies of Employment letter and Wage Agreement, wherein mentioned was made regarding recovery of subsidised charges for availing canteen facility. The AR also cited the following ruling passed by AARs of other states, where the issue was decided in their favour:- i. Shriram Pistons and Rings Limited -2023-VIL-106-AAR ii. Cadila Pharmaceuticals Limited - 2023-VIL-68-AAR iii. Brandix Apparel India Private Limited - 2023-VIL-63-AAR iv. Astral Limited - 2022-VIL-82-AAR v. Zydus Lifesciences Limited - 2022-VIL 260-AAR vi. Tata Autocomp Systems Limited -2023-VIL-108-AAR 3.2. The AR was asked to submit the following documents:- • Copies of agreements with the employees from 2017-18 • Sample invoices issued to Manpower supplier • Copies of books of accounts showing accounting entry in respect of staff welfare • Copies of sample consolidated invoices issued for recovery of nominal charges from the employees. •....
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....r, 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 question on which he has sought Advance Ruling: Whether recovery of subsidised value from employees for providing canteen facility would (a) amount to 'supply' under the CGST Act and (b) whether the recovery would attract GST under the following two models:- • Model I - Canteen operated by the Applicant within the factory premises • Model II - Canteen run by Applicant's subsidiary company operating within common premises for which the subsidiary company recovers charges from the Applicant. It is seen that in Model I the Applicant had set up a canteen facility in their Padi factory for the benefit of its employees and workers, wherein the cook is their employee and inputs for cooking are bought by the Applicant. In Model II, operated in Oragadam and Hosur, Canteen run by Applicant's subsidiary compan....
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....oyees appointment order dated 08.05.2018, 02.03.2018 and 03.10.2016 furnished in respect of Shri M Aravindhan, Shri A Bakiaraj and Shri V Velmurugan respectively, it is seen that at point no. 19, 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 Die Casting Division, Hosur, wherein at point No. 30, 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 either by himself or through a third party 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 pre....
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...., whether or not it is for a pecuniary 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....
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.... a specific mention in the appointment order regarding recovery of subsidised charges for availing canteen 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 t....
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....oyment appointment orders issued to their employees, it is evident that, inter alia, there exists a clause stating that "You 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 ....