TaxTMI 
TaxTMI 
2025 (8) TMI 1324
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....es for providing such accommodation facility. The applicant further stated that accommodation facility in the dormitory is provided only to the employees and student trainees and not to their family members. Further, if the employees choose not to use the accommodation facility, then in such cases, they have an option to opt out of the facility by submitting an exit form. 4. The applicant stated that in order to provide the accommodation facility in dormitory to its employees and student trainees, the applicant has entered into an agreement with third-party accommodation service provider [for short - 'ASP']. The accommodation service provider issues monthly invoice for providing the accommodation facility in the dormitory and recovers GST at the rate of 18% from the applicant. 5. The applicant believes that the accommodation facilities so provided to its employees do not qualify as 'supply' in terms of section 7 of the CGST Act and is therefore not leviable to GST. Thus, no GST is liable to be discharged on the recoveries made by the applicant towards such accommodation facilities from the employees. However, in case where the said accommodation facility is provided to the st....
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....s of 'supply' to fall within the ambit of section 7 of the CGST Act; • any amount received towards the accommodation facility i.e., nominal amounts recovered from the employees is not 'consideration' since it is not premised on the enforcement of any reciprocal obligation, and cannot be linked to a 'supply' for the purpose of levy of GST; • that the applicant deducts a pre-determined amount from the employee's salary as recovery of expenses; that there is no reciprocity of any activity or transaction i.e., there is no quid pro quo (there is no implied or express reciprocity) and direct and immediate link or nexus between the accommodation services provided by the accommodation service providers to the applicant and the nominal amounts recovered by the applicant from the employees in terms of the company policy; • that in the absence of an identifiable supply, the activity of recovering nominal amounts from the employee's salary towards the provision of accommodation would not constitute 'consideration' for a supply; • that the applicant further relies on the • ruling of GAAR in the case of M/s Cadmach Machinery Pvt Lt....
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....ness of the applicant, qualifies as a supply of accommodation services. It is further submitted that accommodation facility provided to student trainees by the Applicant will not qualify as a "perquisite" in terms of the Circular No. 172/04/2022-GST dated 06.07.2022 as student trainees are not 'employees' of the applicant. • that the recovery of accommodation charges made from the student trainees will be liable to GST. 8. On the third issue regarding admissibility of ITC in respect of accommodation facility provided to employees, the applicant has made the following submission viz • that as per sub section (1) of section 16 read with sub section (60) and (17) of section 2, the applicant is eligible to claim ITC of the GST paid on procurement of accommodation services, since such input services are used or intended to be used in the course or furtherance of the business; • that the ITC of the GST paid on procurement of accommodation services is not restricted in terms of section 17(5) of the CGST Act; • that they would like to rely on the below mentioned ruling wherein GAAR held that the applicant is eligible to avail ITC of th....
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....d Shri Rajesh Meharchandani, AGM (Taxation) of the applicant appeared and reiterated the facts as stated in the application. In the additional submissions dated 15.4.2025, while reiterating the averments already made in the application, they also submitted illustrative copies of employment agreements pertaining to fixed term employees, company trainees and student trainees marked as Annexure A. 12. In In pursuance to the change in Member (State), fresh personal hearing was held on 29.7.2025, wherein Shri Jigar Shah (Advocate), Ms. Priyanka Kalwani, (Advocate), Ms. Aanchal Trivedi (Advocate) and Shri Rajesh Meharchandani, AGM (Taxation) of the applicant appeared and reiterated the facts as stated in the application. 13. Assistant Commissioner of State Tax, Unit 11, Ahmedabad, vide his letter dated 24.4.2025, made the following submissions, viz • that GST is generally not liable to be discharged on nominal amounts recovered from employees for accommodation; • that GST is liable to be discharged on nominal amounts recovered from student trainees for accommodation; • that ITC is not available on accommodation for employees as it is hit by se....
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....) [ **** ]. [(1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.] (2) Notwithstanding anything contained in sub-section (1),- (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. (3) Subject to the provisions of [sub-sections (1), (1A) and (2)], the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as - (a) a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of goods. • Circular No. 172/04/2022-GST S.No Issue Clarification 5 Whether various perquisites provided by the employer to its employees in....
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....are availing accommodation facility would not be considered as a 'supply' under the provisions of section 7 of the CGST Act, 2017. However, the aforementioned finding is only in respect of permanent employees. 20. Moving on to the second question as to whether GST is liable to be discharged on the amount recovered by the applicant from student trainees towards the accommodation facility provided to them. As far as this question is concerned, even the applicant agrees that the accommodation facility provided to student trainees will be considered as supply as these student trainees are not on the payroll of the applicant and since they are not employees, the facility so provided cannot be termed as a perquisite. Input Tax Credit (ITC) [in respect of permanent employees of applicant] 21. The third question on which the applicant has sought ruling is whether ITC of GST charged by the ASP for the accommodation facility provided to its employees and student trainees can be availed by the applicant. 22. The relevant extracts of section 17(5), ibid, which deals with blocked credit, is reproduced below, for ease of reference, viz Section 17. Apportionment of credit ....
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....person (employee or director or any person who can consume on behalf). We find that if the immediate benefit is for the said person but the ultimate benefit is for the supplier company, the credit would not be restricted. In view of the foregoing, we hold that ITC will be available to the applicant in respect of accommodation facility provided to its employees. Having said so, it is further held that the ITC on GST charged by the ASP 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. Input Tax Credit (ITC) [in respect of student trainees of applicant] 23. The last question of the applicant is whether the applicant is eligible to avail ITC of the GST charged by the ASP for the accommodation facility provided to student trainees. We find that the Assistant Commissioner, Sales Tax, Unit 11, Ahmedabad, vide his letter has submitted that the ITC is blocked in terms of section 17(5). We have given recorded our reasons for not agreeing with the aforementioned view. We....