TaxTMI 
TaxTMI 
2025 (3) TMI 360
X X X X Extracts X X X X
X X X X Extracts X X X X
....against the Advance Ruling No. GUJ/GAAAR/R/2022/38 dated 10.08.2022. 3. Briefly, the facts are enumerated below for ease of reference: • the appellant is engaged in the manufacture, sale & distribution of pharma products and is registered with the department; • the appellant has appointed a CSP [Canteen Service Provider]; • the appellant provides subsidized canteen facilities to its employees & contractual workers; • the appellant recovers 50% of the amount from the employees; • that as far as security service contract workers is concerned, the canteen service provider raises bill for only 50% of the amount as the rest of the amount is being directly paid by the individual workers to the service provider. 4. In view of the foregoing facts, the appellant had sought Advance Ruling on the following questions, viz: 1. Whether GST shall be applicable on the amount recovered by the company, Troikaa Pharmaceuticals Limited, from employees or contractual workers, when provision of third-party canteen service is obligatory under section 46 of the Factories Act, 1948? 2. Whether input tax credit of GST p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... • that in terms of provision of chapter V of CLRA [Contract Labour (Regulation & Abolition) Act, 1970], 1970, the labour contractor shall provide the canteen facility to the labour employed by the contractor; • that there is no mandate that the appellant is required to provide canteen facility to the contractual worker; • that since providing canteen facility to contractual workers is not obligatory, ITC is blocked in terms of section 17 (5) of the CGST Act, 2017. 6. The GAAR, vide the impugned ruling dated 10.08.2022, held as follows: RULING 1. GST, at the hands of M/s Troikaa, is not leviable on the amount representing the employees portion of canteen charges, which is collected by M/s Troikaa and paid to the Canteen service provider. 2. GST, at the hands of M/s Troikaa, is leviable on the amount representing the contractual worker portion of canteen charges, which is collected by M/s Troikaa and paid to the Canteen service provider. 3. ITC on GST paid on canteen facility is admissible to M/s Troikaa under Section 17 (5)(b) of CGST Act on the food supplied to employees of the company subject to the condition that b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....CA appeared on behalf of the appellant and reiterated the grounds of appeal. 9. The appellant thereafter vide additional submission through email dated 29.1.2025, addressed to Registry, stated as follows: With reference to our hearing held on 21-01-2025, we are attaching herewith following: 1. Our contract with a contractor named PSM Enterprise wherein para 18 clearly mentions that if the contractor does not comply with statutory regulation, the company will have to undertake the same. 2. Our contract with a contractor named Tirupati Enterprise wherein para 17 clearly mentions that if the contractor does not comply with statutory regulation, the company will have to undertake the same. 3. Our contract with a contractor named Samraat Dun wherein para 20 clearly mentions that if the contractor does not comply with statutory regulation, the company will have to undertake the same. Hence, in view of the above, we again would like to reiterate and draw your kind attention towards following: • Troikaa is under legal obligation to provide canteen facilities even to its contractual employees through these contracts read with rele....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ters required as per the act. The Contractor shall produce the records to the company executive as and when demanded. The contractor will be responsible for all the consequences including penalties if any for non compliance with respect to the applicable labour laws. Any deviation in statutory compliance will lead to penalty as per Annexure B (No Annexure B is attached). 14. The contractor shall also comply with all other labour and industrial laws and such other Acts and status as may be applicable to the contractor from time to time and maintain the necessary documents/records and submit to concern Authorities. 16. The contractor shall make all the statutory deductions from the salary/wages payable to the workers towards ESIC, PF, Labour Welfare Fund and professional tax etc as may be applicable from time to time and submit a copy of the certificate proof that all the statutory dues including ESIC and PF has been paid by him in time. Statement of such deductions and payments made shall be submitted along with the contractor's monthly bill. 17. The company will not in any way be responsible for non-compliance of any labour laws, applicable to the contrac....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Clarification on various issues of section 17 (5) of the CGST Act 3. Whether the proviso at the end of clause (b) of sub-section (5) of section 17 of the CGST Act is applicable to the entire clause (b) or the said proviso applicable only to sub-clause (iii) of clause (b)? 1. Vide the Central Goods and Service Tax (Amendment Act) 2018, clause (b) of sub-section (5) of section 17 of the CGST Act was substituted with effect from 01.02.2019. After the said substitution, the proviso after sub-clause (iii) of clause (b) of sub-section (5) of section 17 of the CGST Act provides as under: "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." 2. The said amendment in sub-section (5) of section 17 of the CGST Act was made based on the recommendations of GST Council in its 28th meeting. The intent of the said amendment in sub-section (5) of section 17, as recommended by the GST Council in its 28th meeting, was made known to the trade and industry through the Press Note on Recommendations made during the 28t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oyees and under CLRA if the contractor does not provide the canteen facility it is to be provided by the appellant; that in terms of section 2(1) of the Factories Act, 1948, worker includes a contractual worker. The other averments have already been listed in paragraph 7 and is not being repeated for the sake of brevity. 14. Section 20 & 21 of CLRA, 1970, is reproduced below for ease of reference viz 20. Liability of principal employer in certain cases (1) If any amenity required to be provided under Section 16, Section 17, Section 18 or Section 19 for the benefit of the contract labour employed in an establishment is not provided by the contractor within the time prescribed therefor, such amenity shall be provided by the principal employer within such time as may be prescribed. (2) All expenses incurred by the principal employer in providing the amenity may be recovered by the principal employer from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor. 21. Responsibility for payment of wages.- (1) A contractor shall be responsible for payment of wages ....