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2023 (4) TMI 203 - AAR - GSTLevy of GST - amount recovered from employees for canteen facility provided to them - amount recovered from employees for transportation facilities provided to them - HELD THAT - It is clearly seen that the provision of service of canteen is by the third-party to the applicant and not by the applicant to their employees. As per Section 7 of the CGST ACT, supply includes all forms of supply of goods or services for a consideration by the person in the course or furtherance of business. The applicant is involved in the supply of manufacture of apparel and not in the activity of provision of canteen service. The canteen service is not an output service of the applicant as it is in the business of apparel manufacture. In fact, the canteen services are being received by the applicant from the third-party providers. Therefore, it can be concluded that the provision of canteen facility by the applicant to the employees is not a supply as it is not in the course or furtherance of business. Further, the applicant is merely collecting a part of the canteen expenses from the employee and this does not tantamount to supply as per Section 7 of the CGST and SGST Act. Further, even if the transaction between the applicant and its employees are analysed, a reference to the GST Policy wing Circular 172/04/2022 dated 6th July 2022, para 2, serial no 5, clarifies that any perquisites provided by the employer to its employee in are In lieu of the services provided by the employee to the employer in relation to the employment and therefore the perquisites provided by the employer to the employee will not be subjected to GST. As provision of canteen facility is a mandate as per Factories Act, 1948, we see that even considering the employee and employer transaction solely, GST is not applicable - the applicant is not liable to pay GST on the recoveries from the employees for the canteen services provided to them. Levy of Service Tax - transportation services by a third-party to the employees of the applicant - HELD THAT - The service provider is charging Rs 2,277 from the applicant per month per employee. The applicant is recovering Rs 350 per employee per month and bearing Rs 1927 on their account - the main business of the applicant is manufacture of apparel and they are not engaged in the business of bus transportation. The transportation services is not a supply for the applicant made in the course or furtherance of business and the recoveries made by the applicant from their employees does not fall under the definition of supply under Section 7. Further, the transportation services are being supplies by the third-party to the applicant and they are receiver and not supplier of the same. Therefore, it can be concluded that the GST is not applicable for the recoveries from the employees for the transportation services provided to them.
Issues Involved:
1. Applicability of GST on the amount recovered from employees for canteen facilities. 2. Applicability of GST on the amount recovered from employees for transportation facilities. Summary: Issue 1: Applicability of GST on Canteen Facility The applicant, engaged in the manufacture of apparels, provides canteen services to its employees through a third-party contractor. The total cost per employee is Rs. 1,538.25, out of which Rs. 578 is recovered from the employees and the remaining Rs. 960.25 is borne by the applicant. The applicant contends that this service is mandated under the Factories Act, 1948, and is not in the course or furtherance of their business. They argue that the canteen services are not a "supply" under Section 7 of the CGST Act, as the applicant is merely a receiver of the service, not a provider. Various rulings by AAR and AAAR, including those in the cases of M/s Emcure Pharmaceuticals Limited and M/s Cadila Healthcare Limited, support the applicant's position that GST is not applicable on the recoveries made from employees for canteen services. The Authority for Advance Ruling (AAR) agrees with the applicant's interpretation, stating that the provision of canteen services is not in the course or furtherance of business. Additionally, per the GST Policy wing Circular 172/04/2022, perquisites provided by the employer to the employee in relation to employment are not subject to GST. Therefore, the applicant is not liable to pay GST on the recoveries from employees for canteen services. Issue 2: Applicability of GST on Transportation Facility The applicant also provides transportation services to its employees through a third-party contractor, with the total cost per employee being Rs. 2,277, out of which Rs. 350 is recovered from the employees and the remaining Rs. 1,927 is borne by the applicant. The applicant argues that this service is not in the course or furtherance of their business and that they are merely a receiver of the service, not a provider. Various rulings, including those in the cases of M/s Tata Motors Limited and M/s North Shore Technologies Pvt Ltd., support the applicant's position that GST is not applicable on the recoveries made from employees for transportation services. The AAR concurs with the applicant's interpretation, stating that the provision of transportation services is not in the course or furtherance of business. Therefore, the applicant is not liable to pay GST on the recoveries from employees for transportation services. RULING: 1. GST is not applicable on the amount recovered from employees for canteen facilities. 2. GST is not applicable on the amount recovered from employees for transportation facilities.
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