9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (3) TMI 738 - AAR - GSTLevy of GST - Composite supply or not - recovery of nominal amount by the Applicant from employees for availing the facility of Canteen at the factory premises - recovery of premium of Medical Insurance Policy from the employees for them and their dependents at actuals under the HR Policy - recovery of nominal amount from employees for using of transportation facility to and from the factory and office premises provided to the employees in the course of employment - facility of Car extended to the employees of the Applicant-Company in the course of employment - ITC on facility of canteen service provided to employees by applicant as statutory obligation under Factories Act - ITC on on expense incurred for the well-being of employees such as vaccination and other benefits to avoid any disruption in Business - ITC on GST charged for gardening expenses of the Applicant-Company. Whether GST is applicable on recovery of nominal amount by the Applicant from employees for availing the facility of Canteen at the factory premises? - HELD THAT - The canteen service provided by the applicant company on its own account to its employees, is a composite supply which gets treated as a supply of service in terms of Entry No. 6 of Schedule II to the CGST Act, 2017 - the amount charged on the employees by the applicant, whether nominal or otherwise, is to be treated as the consideration for such supply of canteen service on its own account to its employees on which taxes under GST is liable to be discharged by the applicant/employer. Whether Input Tax Credit is available on facility of canteen service provided to employees by applicant as statutory obligation under Factories Act - HELD THAT - GST charged on the inward supplies received, if any, in relation to the provision of food to the employees by the applicant is admissible as ITC to them, provided the number of direct employees in the establishment is more than 250. Further, it is also held that while availing such ITC, the proportionate credit to the extent of cost recovered from such employees is required to be reversed by the applicant/employer. Whether GST is applicable on the recovery of premium of Medical Insurance Policy from the employees for them and their dependents at actuals under the HR Policy - HELD THAT - The applicant is just a facilitator in the transaction relating to insurance, and practically no supply of service is made in the course or furtherance of business by the applicant in the instant case. Since the provision of this insurance cover to the employees and their dependents is reportedly provided in terms of the HR policy of the Applicant-Company, the same is to be treated as a contractual agreement entered into between the employer and the employee in accordance with clause 1 of Schedule III of the CGST Act, 2017, which is neither a supply of goods nor a supply of service. As per Section 7(2) of the Act, ibid, Schedule III supersedes Schedules I and II, which means that even if it is considered as a supply under Section 7(1), no tax will be payable in view of the provisions contained in clause 1 of Schedule III - no supply of service by the applicant is present in the instant case involving the collection and remitting of insurance premium to the insurance companies, and therefore GST is not liable to be discharged on such cases. Whether GST is applicable on recovery of nominal amount from employees for using of transportation facility to and from the factory and office premises provided to the employees in the course of employment? - HELD THAT - In the instant case, the cab operators are the actual services providers, and that the applicant is not involved in any supply of transportation service to the employees, Further, in the instant case the applicant themselves pay up the actual cost of transportation to the service providers, i.e., the cab operators, but recovers only a nominal portion of the transportation cost from the employees, whereby the remaining portion of the transportation cost is borne as expenditure by the applicant. Further, since the nominal amount recovered from the employees forms part of the total cost reimbursed to the transportation service providers, no consideration actually accrues to the applicant in the instant case as well - no supply of service by the applicant is present in the instant case involving the transportation facility extended to the employees through a third party, and therefore GST is not liable to be discharged on such cases. Whether GST is applicable on facility of Car extended to the employees of the Applicant-Company in the course of employment? - HELD THAT - In the instant case, the Applicant-Company reportedly pays the lease premium directly to car leasing company, and the overall salary cost of the related employees will get reduced to the extent of cost incurred by Applicant-Company to extend the expense incurred in relation car facility provided to employees for office purpose. However, wo notice that the circumstances relating to the car lease premium differs basically from the other cases discussed above in view of the fact that these types of car facility are normally provided to a few specific employees of the organisation, and that they are not general in nature like the canteen facility, insurance facility or the mass transportation facility - the cars are normally booked under the name of the company/organization, and it remains with them for a specific period, or until the lease period is over. Therefore, when the applicant provides the said service to their employees on their own account, and when the clement of perquisite is absent in the instant case, it is held that under the circumstances of the case, GST is applicable on the facility of Car extended to the employees of the Applicant-Company, even if it is in the course of employment. Whether Input Tax Credit can be availed on expense incurred for the well-being of employees such as vaccination and other benefits to avoid any disruption in Business? - HELD THAT - As per Section 17(5)(b) of the CGST Act, 2017, the supply of goods or services or both in relation to health services cannot be availed as ITC, unless it is obligatory for an employer to provide the same its employees under any law for the time being in force. We notice that inspite of their claim that providing medical facility is part of service contract, the applicant has not adduced any details or documentary evidence in support of the same, and as a result no further discussions could be made in this regard. Moreover, even in the event of considering the same as an obligation or responsibility on the part of the employer, the same should be mandated under any law for the time being in force, and this aspect has not been substantiated by the applicant - the only respite available to the applicant in the form second proviso to Section 17(5)(b) of the CGST Act, 2017, also stands exhausted as discussed above, and therefore it is held that Input Tax Credit cannot be availed on the expense incurred for the wellbeing of employees such as vaccination and other health benefits extended to them. Whether Input Tax Credit is available on GST charged for gardening expenses of the Applicant-Company? - HELD THAT - The definition of input service provided under Rule 2(1) of the erstwhile CENVAT Credit Rules, 2004 was already wide enough to encompass the availability of credit on such gardening services, as it contained the words, whether directly or indirectly, in or in relation to the manufacture . Whereas the definition of input service provided under Section 2(60) of the CGST Act, 2017, is much wider as it contains the words in the course or furtherance of business - Having been mandated by the Tamil Nadu Pollution Control Board under Section 21 of the Air (Prevention and Control of Pollution) Act, 1981, as amended in 1987 (Centred Act 14 of 1981), and the rules and orders made thereunder, as discussed in detail above, it is observed that gardening and maintenance of green belt in and around the unit s premises is an activity in the course or furtherance of business that is mandatorily required to be carried out by the applicant - ITC is available on the input services received by the applicant in the instant case, in relation to gardening activities carried out within the factory premises.
Issues Involved:
1. GST applicability on recovery of nominal amount for canteen facility. 2. Eligibility of Input Tax Credit (ITC) on canteen services. 3. GST applicability on recovery of medical insurance premium. 4. GST applicability on recovery of nominal amount for transportation facility. 5. GST applicability on car facility extended to employees. 6. ITC eligibility on expenses for employee well-being. 7. ITC eligibility on gardening expenses. Summary: 1. GST Applicability on Recovery of Nominal Amount for Canteen Facility: The applicant provides in-house canteen services to employees, recovering a nominal amount from their salaries. The ruling clarified that perquisites in terms of a contractual agreement between the employer and employee are outside the ambit of GST. However, since no employment contracts were furnished, the canteen service provided by the applicant is treated as a supply of service. Therefore, GST is applicable on the amount charged to employees. 2. Eligibility of Input Tax Credit (ITC) on Canteen Services: ITC on food and beverages is generally blocked under Section 17(5) of the CGST Act, except when it is obligatory for the employer to provide such services under any law. The Factories Act mandates canteen facilities for establishments with more than 250 employees. Therefore, ITC is admissible on the GST paid for canteen services, provided the number of employees exceeds 250. However, the proportionate credit to the extent of cost recovered from employees must be reversed. 3. GST Applicability on Recovery of Medical Insurance Premium: The applicant recovers the premium for group medical insurance at actuals from employees and remits it to the insurance company. The ruling held that the applicant acts merely as a facilitator and does not supply insurance services. Therefore, GST is not applicable on the recovery of medical insurance premiums from employees. 4. GST Applicability on Recovery of Nominal Amount for Transportation Facility: The applicant provides transportation facilities through third-party services and recovers a nominal amount from employees. The ruling determined that the applicant is not supplying transportation services but merely facilitating the service. Therefore, GST is not applicable on the recovery of nominal amounts for transportation facilities. 5. GST Applicability on Car Facility Extended to Employees: The applicant provides car leasing facilities to employees, recovering the lease premium from their salaries. The ruling clarified that since the applicant does not bear any cost and recovers the entire lease premium, the amount recovered does not qualify as a perquisite. Therefore, GST is applicable on the car facility extended to employees. 6. ITC Eligibility on Expenses for Employee Well-being: The applicant extends various health benefits to employees, including vaccinations. The ruling held that such expenses are for personal consumption and are blocked under Section 17(5) of the CGST Act. Therefore, ITC cannot be availed on expenses incurred for employee well-being. 7. ITC Eligibility on Gardening Expenses: The applicant maintains a garden at the factory premises as mandated by the Tamil Nadu Pollution Control Board. The ruling determined that gardening services qualify as input services used in the course or furtherance of business. Therefore, ITC is available on gardening expenses. Ruling: (a) GST is applicable on the amount charged for canteen services. (b) ITC is available on canteen services if the number of employees exceeds 250, with proportionate credit reversal. (c) GST is not applicable on the recovery of medical insurance premiums. (d) GST is not applicable on the recovery of nominal amounts for transportation facilities. (e) GST is applicable on the car facility extended to employees. (f) ITC cannot be availed on expenses for employee well-being. (g) ITC is available on gardening expenses.
|
