TaxTMI 
TaxTMI 
2024 (1) TMI 703
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....t their factory premises. 4. As per the agreed arrangement with the CSP, the applicant allows the CSP to use utensils like tea urns, glass tumblers, eating plates, steel bowls and other utensils necessary for the preparation of food and serving foods items at the canteen. The CSP raises the invoice along with applicable GST for its canteen services. The invoice is raised by the CSP on the basis of the consumption by the employees of the applicant, which is tracked based on employees of the applicant who avail the canteen facility. A part of the canteen charges is borne by the applicant whereas the remaining part is borne by their employees. 5. The employees' portion of canteen charges is collected from employee's salaries and paid to the CSP by the applicant on behalf of employees. The amount so collected is without any commercial objective, or profit margin and to maintain discipline. The applicant accounts the canteen expense basis the invoice raised by the CSP in its statement of profit and loss account. Further, the amount collected by the applicant from its employees, is credited to the expense account in which the canteen expenses are booked. 6. The applicant further state....
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....cals P Ltd, (Appeal No. Guj/GAAR/Appeal/2021/07 dtd 8.3.2021) M/s. Tata Motors, (Ruling no. Guj/GAAR/R/39/2021 dtd 30.7.21) M/s. Emcure Pharmaceuticals Ltd, (Ruling no. GST-ARA-119/2019-20/B-03 dtd 4.1.2022) Troikaa Pharmaceuticals Ltd, (Ruling number Guj/GAAR/R/2022/38 dtd 10.8.2022) M/s. Munashi Auto Parts India P Ltd, (Appeal No. HAAAR/2020-21/061 dtd 31.3.2022) M/s. Cadila Health Care Ltd. (Ruling No. Guj/GAAR/R/2022/19 did 12.4.2022) M/s. Astral Ltd, (Ruling no. Guj/GAAR/R/2022/01 dtd 7.3.2022) M/s. Intas Pharmaceutical Ltd, (Ruling No Guj/GAAR/R/2022/03 did 7.3 2022) M/s. AIA Engineering Ltd, (Ruling No. Guj/GAAR/R/2023/12 dtd 31.3.2023) M/s. Cadila Pharmaceuticals Ltd. (Ruling No. Guj/GAAR/R/2023/14 dtd 31.3.2023) 7. The applicant has filed this application for advance ruling raising the following questions viz (i) Whether the subsidized deduction made by the applicant from the employees who are ultimate recipient of canteen facility provided in factory/corporate office would be considered as 'supply' under the provisions of section 7 of the CGST Act, 2017 and the GGST Act, 2017? (ii) If the answer to the above is affirmative, the value at which the GS....
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....he issue involved, the relevant facts & the applicant's submission/interpretation of law in respect of question on which the advance ruling is sought. 11. Before adverting to the submissions made by the applicant, we would like to reproduce the relevant sections, circular, press release etc., for ease of reference: * Section 7. Scope of supply.- (1) For the purposes of this Act. the expression - "supply" includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; 1[(aa) the activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration. Explanation -For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions....
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....xable 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] * CBIC's press release dated 10.7.2017 Another issue is the taxation of perquisites. It is pertinent to point out here that the services by an employee to the employer in the course of or in relation to his employment is outside the scope of GST (neither supply of goods or supply of services). It follows therefrom that supply 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 Further, the input tax credit (ITC) scheme under GST does not allow ITC of membership of a club, health and fitness centre section 17 (5) (b) (ii) It follows, therefore, that if such services are provided free of charge to all the employees by the employer then the same will not be subjected to GST provided....
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....oyer provided they are in the course of or in relation to employment. 2. Any perquisites provided by the employer to its employees in terms of contractual agreement entered into between the employer and the employee are in lieu of the services provided by employee to the employer in relation to his employment. It follows there from 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. 12. The facts having been enumerated supra we do not intent to repeat the same for the sake of brevity. Canteen 13. The first issue to be decided is whether the deduction of nominal amount made by the applicant from the employees who are availing food in the factory premises would be considered as a 'supply' under the provisions of section 7 of the CGST Act, 2017. Now, in terms of Section 7 of the CGST Act, 2017, supply means all forms of 'supply' of goods/services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration b....
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....ly clarifies that post substitution, effective from 1.2.2019, based on the recommendation of the GST council in its 28th meeting, the proviso after sub clause (iii) of clause (b) of Section 17(5) of the GGST Act, 2017 is applicable to the whole of clause 17(5)(b), ibid. 17. In view of the foregoing, we hold that Input Tax Credit will be available to the appellant in respect of food and beverages as canteen facility is obligatorily to be provided under the Factories Act, 1948, read with Gujarat Factories Rules, 1963 as far as provision of canteen service for employees is concerned. It is further held that the ITC on GST charged by the CSP will be restricted to the extent of cost borne by the appellant only. Our view is substantiated by the Ruling of the Gujarat Appellate Authority for Advance Ruling order No. GUJ/GAAAR/Appeal/2022/23 dated 22.12.2022 in the case of M/s. Tata Motors Ltd, Ahmedabad. 18. 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. It is further held that the ITC on GST charged by the TSP will b....