TaxTMI 
TaxTMI 
TaxTMI 
2024 (7) TMI 981
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to their employees. The applicant recovers Rs. 104/- on monthly basis from each employee in respect of the food being prepared and supplied by the CSP. 4. Further, the applicant states that in terms of section 46 of the Factories Act, 1948, since they have employed more than 300 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 set up 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 attached a copy of agreement executed with the CSP and copy of sample invoice as Annexure 1 and Canteen Policy as Annexure 2 with their application. 6. 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 ra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted [GUJ/GAAR/R/39/2021]; * Bai Mumbai Trust and Others vs. Suchitra and others reported at [2019-VIL-454 BOM]; * M/s. Amncal Pharmaceuticals Ltd [GUJ/GAAR/R/50/2020]; * M/s. SRF Limited [GUJ/GAAR/R/41/2022]: * Posco India Pune Processing Center Private Limited [GST-ARA-36/2018-19/B-110]-Maharashtra; * M/s Jotun India Pvt Ltd [GST-ARA-19/2019-20/B-108]-Maharashtra; * M/s. Cadila Pharmaceuticals Ltd [GUJ/GAAR/R/2023/14]; * M/s. TATA Autocomp Systems Limited [GUJ/GAAR/2023/23]; * M/s. Emcure Pharmaceuticals Ltd [GST-ARA-119/2019-20/B-03 dated 4.1.22]. ITC of the GST paid by the applicant to CSP * that credit of ITC charged on supply of services would only be allowed when such goods or services or both are used or intended to be used in the course of furtherance of business; * that the CSP provides the services to the applicant in the preparation of food and maintenance of canteen premises, for the applicant's employees; that such services are provided in pursuance of applicants obligation to provide such facilities to its employees in the capacity of an occupier of the factory under the Factories Act; * that in terms of circular no. 172/04/2022-GST dated 6.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... made by the applicant in their application for advance ruling as well as the submissions made during the course of personal 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: * 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; [(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 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a taxable 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by employee to employer 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. 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, exch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....with the Canteen contractor and Canteen committee. The communication of the meeting outcome will be communicated to the concerned by the committee. e. Canteen contractor ensure 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 ru....