TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 222
X X X X Extracts X X X X
X X X X Extracts X X X X
....at in terms of section 46 of the Factories Act, 1948, since they have employed more than 500 employees, they are mandated to provide canteen for their employees; that they have ultimate control over the affairs of the factory & would be considered as an 'occupier'; that they have setup a canteen facility having a separately demarcated area in the factory premises pursuant to & in compliance with the Factories Act; that the canteen facility has seating area with tables and chairs, cooking facility with utensils, refrigeration, storage rooms for keeping the cooked food, washrooms and wash basin, etc.. 5. The applicant has further contended as follows: No GST on canteen facility * that the detail of food consumed & details of employee is maintained by the applicant; that based on the record of food consumed, the CSP raises an invoice; that after termination of employment services, the employee is not allowed access to canteen facilities; * that deduction of the nominal amount from employees would become taxable under GST only if such amount qualities as 'consideration' towards supply as defined u/s 7 of the CGST Act, 2017; * that in terms of Schedule-Ill, services by an employ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2022-GST dated 6.7.22, it is clarified that the proviso at the end of clause (b) of section 17 (5), ibid, is applicable to the entire clause 17 (5) (b), ibid; * the circular clarifies that ITC on food & beverages, etc., covered u/s 17 (5), would not be restricted provided it is obligatory for an employer to provide the same to its employees under the law; * that in respect of the aforementioned issues on which ruling is sought, they wish to rely on the below mentioned case laws/rulings: [a] Amneal Pharmaceuticals P Ltd [GUJ/GAAR/R/50/2020 dtd 30.7.20] [b] Bal Mumbai Trust [Commercial suit (I) MP/ 236/2017] [c] TATA Motors Ltd [Guj/GAAR/R/39/2021 dtd 30.7.2021] [d] TATA Motors Ltd [GST-ARA-23/2019-20/B-46] [e] Posco India Pune Processing Centre P Ltd [GST-ARA 36/18-19/B-1 10] [f] Jotun India P Ltd [2019 (10) TMI 482] [g] Cinemax India Ltd [SCA 8032/2011] [h] Raipur Manufacturing Co [CA 603/1965]; [i] IIT [WP 1768/1973] " [j] Encure Pharmaceuticals Ltd [GST-ARA-119/2019-20/B-03 dtd 4.1.2022] [k] SRF Ltd [GUJ/GAAR/R/41/2022 dtd 28.9.22] [l] Cadila Pharmaceuticals Ltd [GUJ/GAAR/R/2023/14 dtd 31.3.2023] [m] TATA Autocomp Systems Ltd [GUJ/GAAR/R/2023/23] 6.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l hearing. We have also considered the 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 provisions/circular for ease of reference: * 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; [(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 trans....
X X X X Extracts X X X X
X X X X Extracts X X X X
....; 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 appropriate GST was paid when procured by the employer. The same would hold true f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erquisites 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 therefrom 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. 13. The first issue to be decided is whether the deduction of a nominal amount made by the applicant from the salary of the employees who are availing the facility of food provided in the factory would be considered as a 'supply' of services by the applicant 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 by a person in the course or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nteen contractor ensures the quality of the raw material and storage at the proper place with proper housekeeping and pest control measures. FIFO system should be adopted to ensure consumption of raw material in the right manner. f. Canteen contractor and maintenance team should have common observation round in the canteen for the equipment's and the facilities provided to the canteen contractor are used properly and maintained as per the guidelines. g. The canteen committee and in-charge should ensure the medical check and hygiene of the canteen staff regularly. h. The canteen timetable should be communicated and displayed at the proper location in the canteen." In view of the foregoing, we hold that the deduction of nominal amount made by the applicant from the salary of the employees who are availing the facility of food provided in the factory premises would not be considered as a "supply' under the provisions of section 7 of the CGST Act, 2017. 15. Since the answer to the above is not in the affirmative, the ruling sought in respect of the second question is rendered infructuous. Input Tax Credit 16. The next question on which the applicant has sought ruling is wheth....