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TMI Blog2018 (10) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... s like contract for running a pharmacy outlet simply for dispensing medicine and other allied product free of charge. This is a clear case of supply without consideration mainly to the employees of the applicant. Still some other services like maintaining the power grid is predominantly for use in the plant and maintaining the solid waste treatment plant seems to be for treating the solid waste of the plant. The services are varied in nature and intended for partly business use (to the extent intended for the plant, plant area or plant building) and partly non business use (to the extent intended for use outside the applicant area). Some of the services ere for use in the residential colony while some other are for use in the hospital and guest houses. Undeniably the applicant is providing services to its employees by way of residential accommodation in the colony, temporary accommodation in the guest houses and is dispensing health services to its employees and others. The services which are being availed clearly in relation to the residential colony shall not qualify for input tax credit. On the other hand services received partly in relation to the residential colony and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ship, guest house, hospital, horticulture in its ordinary course of business. They enclosed copy of challan as proof of payment of ₹ 10,000/bearing CIN No. 18072100016691 dated 10 07.2018 towards the fee for Advance Ruling. After due verification of the Application and other aspect) the application is admitted. 2.0 The applicant, while filing the application seeking advance ruling, explained the facts, cited various judicial pronouncements and tried to justify their claim for entitlement of input tax credit of tax paid on various supplies received for management maintenance and repair of their various properties for their business. it was submitted that the applicant is a Government of India enterprise and engaged in manufacture of calcined alumina, in its refinery located at Damanjodi in the State of Odisha. Produced alumina is transported to aluminium smelter at Angul (Odisha) for production of aluminium cold rolled sheets and coils. As part of its business, it is having townships at Damanjodil Angul and residential colony at Bhubaneswar. It runs hospitals at Damanjodi and Angul for its employees. It also has guest houses for touring employees and guests. The applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto the supply of Health Service, Dwelling/Accommodation service etc b) whether maintenance of township, Guest house, Hospital for the welfare of the employees would be a supply between related parties. Since the said issues were not clarified/explained properly by the applicant the case was adjourned and next date of hearing was fixed on 19 09 2018. The applicant through its Advocate and representatives were heard on the said date in the matter and the contentions advanced were also examined, Sri Sahu, Advocate submitted a fresh written submission pursuant to hearing on 29 08.2018, wherein he inter-alia explained that the applicant was not into the business of providing dwelling service, accommodation service and health service etc. The applicant is only into the business of manufacturing Aluminium ingots and other aluminium products and the residential colony, guest houses and hospitals have been created in the course of and for furtherance of the core business of Aluminium manufacturing He contended that the goods and services used for maintenance of its townships, guest houses, hospitals and horticulture are also in the course and in furtherance of its business and, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled to take input credit of tax paid on various goods and services procured for use in maintenance of the townships, guest houses, hospitals and horticulture established by the applicant. In fact, ruling on entitlement of input tax credit should be transaction specific and it should not be generalized of course, the applicant has submitted a list of contracts (56 in number as listed in Annexure-A) entered into with different suppliers of goods and services for supply in relation to maintenance of the townships, guest houses, hospitals including horticultural maintenance- At the time of hearing, it was given to understand by the applicant that the list is merely illustrative and not exhaustive meaning thereby the applicant might be entering into similar contracts with other suppliers for similar other supplies, The present ruling is, however, awarded on the supplies as listed in Annexure-A and shall not cover other similar supplies not included in the list. 4.3 Supplies availed by the applicant as per the list in Annexure-A are classified as follows. i) Support Services- These services are in the nature of taking meter reading at residential quarters at Nalco Township, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l waste management equipments of Nalco, contract for cleaning of linens of Shaila Niwas and annex at Nalco, Damanjodi. The services listed at Si No .03 is being availed exclusively for residential colony. Services listed at Sl No.37 and 38 are intended exclusively for the hospital and services listed at Sl No.04 and 09 are partly for residential colony and pertly for the plant area. Services listed at S! No.07 i.e. O M of the solid waste treatment plant seems to be for treating the solid wastes of the plant and plant area. The service listed at Si No .08 i.e fogging operation seems to be for the residential colony. Thus, the services classified under this category are found to have been availed partly for residential colony maintenance, partly for hospital maintenance and partly for plant maintenance. iii) Sweeping and snow removal services- Road sweeping work in Nalco Township, Sector i, ii iii and Saheed Laksman Nayak colony, sweeping work at plant administration building, surakshya vihar, Dr Ambedkar colony. The services listed at SI No.05 is clearly for sweeping work in Nalco township i.e. for maintenance of the residential colony. Conversely the service listed at Sl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the plant use. vi) Painting Services- Periodical Painting for the building inside at NALCO, Damanjodi, Periodical Painting for residential Quarters Public Building at Sector-I of NALCO Township Damanjodi. The services listed at S. No 24 and 25 are for panting the building within the refinery complex which are essentially the business requirement. On the other hand the services list at Sl No. 261 27 and 28 are for panting the residential quarters and other building within the residential colony vii) Human health services including Homeopathy, Urani, Aurveda, Natureopathy and Acupuncture Contract for Pharmacy outlet of Nalco Hospital, Nalco Township, M R Complex, Damanjodi. The contracted service listed at Sl No.36 is for running the pharmacy outlet. As it appears the only activity under this will be to dispense health service by way of providing medicine mainly to the employees. This is a clear case of supply of medicine and other allied pharmaceutical items free of charge or, in other words, frees distribution of medicines. viii) Maintenance and repair services of machinery and equipments-Maintenance of LPG system of Shaila Niwas, Transit House, Damanjodi. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices, availed by the applicant are awarded on contractual basis which ere in the nature of repairs and maintenance of its assets, contained in such township, guest house or hospitals. The residential township or colonies are located outside any factory: The services for maintenance and repairs of these assets includes various activities such as white-washing and painting of building, applying insecticide, roof toping, covering and water proofing of building, maintaining temporary civil structures, garages and parking places, plumbing, sanitary works, grass cutting, gardening tree trimming. and other horticultural activities, mosquito and snake protection activity, removing garbage pots, cleaning, sewage treatment, sweeping, electrification and light fitting, water supplying through pipelines, paving walking bay, laying paving block and brick and so on. All these activities primarily cover contractual jobs awarded on periodic contract under Civil, Electrical, Instrumentation, and Mechanical Engineering activities, under works contract basis. Taken together, these are activities of repair and maintenance of immovable property like land, building and any other civil structures. Simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above referred sub-clauses along with the Explanations, it reveals that the tax credit on input and/or input services received by the applicant for the referred activities are in the form of works contract service, for repairs and maintenance of various immovable property and assets, the input tax credit of which are directly restricted or blocked under specific provision under section 17 of the OGST / CGST Act. c) The hospital / dispensary maintained by the applicant for its employees and society come within the definition of Clinical establishments whose supply is tax exempted under serial 74, heading 9993 of the notification No. 12/2017- Central Tax (Rate) dt. 28th June, 2017. The services rendered by the guest house maintained by the applicant, for the residential or lodging purpose, is also exempted under serial 14, heading 9963 of the notification No, 12/2017- Central Tax (Rate) dated 28th June, 2017. Consequently, the input tax credit on such exempt supply is also restricted under sub section (2) of section 17 of the OGST / CGST Act. In view of the above, the embargo provided in clause (c) and (d) including the Explanations appended to sub-section (5) and (6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing ₹ 50,000/- by the employer to an employee will constitute a supply chargeable to GST. Conversely, in Para I of Schedule III of the Act, it has been made clear that service by an employee to the employer in the course of or in relation to his employment is neither a supply of goods nor a supply of service. There is no converse provision i.e. services provided by an employer to the employees in Schedule III implying thereby services provided by an employer to its employees are supply of services. Possibly, for this confusion, the clarification dated 10 th July, 2017 was warranted to clarify that perquisite provided by an employer to an employee in terms of the employment contracts are not chargeable to GST. On the other hand, as per the provisions in Schedule I Para 2 read with the Explanation to Section 15 of the CGST/OGST Act supply of services by an employer to the employees is a supply between related persons. On the other hand, service by way of residential accommodation in the colonies or otherwise is a perquisite which has been clarified as not chargeable to GST implying thereby any perquisite including residential accommodation is an exempt supply. In the result, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the OGST/CGST Act. Detailed observation on the services availed by the applicant in relation to the hospitals and pharmacy outlets have been made para 4.3. 5.2 Establishing, maintaining and furnishing guest houses including landscaping by way of gardening or otherwise is neither a perquisite nor a statutory obligation. It is purely for providing accommodation service to guests including employees on tour. This is in fact a business requirement to maintain such facilities and accordingly the applicant is entitled to input tax credit of the tax paid on inward supply of input and input services for maintenance of the guest house, transit house, and training hostels, but excluding the food and beverages provided in such establishments. Credit of such input services are as such blocked in clause b of Sub section 5 of section 17 of the OGST and CGST Act. In the case of the applicant, the listed services do not contain any catering service, but the application seeks for a ruling even on such service, It is further clarified that, the applicant might not be charging anything from the guest or the trainees for providing food and beverages in the guest houses and training hostels an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The applicant may claim input tax credit in respect of the input services to the extent allowed above. Ruling In view of the foregoing discussions, the application for advance ruling is disposed accordingly The applicant or the jurisdictional officer, if aggrieved by the ruling given above, may appeal to the Odisha State Appellate Authority for Advance Ruling under Section 100 of the OGST/CGST Act, 2017 within 30 days from the date of receipt of the Advance Ruling. File No. V (1) ARA/Odisha/BBSR/2018/02/10857A-59A dated-28 09 2018 Annexure Annexure-A Sr. No. NAME OF THE CONTRACT AGENCY WO_NO SAC code Description 1. ENERGY METER READING OF RESIDENTIAL QUARTERS AT NALCO TOWNSHIP, DAMANJODI Sushanta Engineers 1552 998599 Other support services n.e.c. 2. ENERGY METER READING OF RESIDENTIAL QUATERS AT NALCO, DAMANJODI ENGINEERS ENTERPRISE 1140 998599 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R M OF TARFELTING, ROOF TREATMENT AND ALLIED WORKS IN QUARTERS AND PUBLIC BUILDINGS M.H. ZAMAN 1347 995419 Services involving Repair, alterations, additions, replacements, renovation, maintenance or remodelling of the buildings covered above 13. R M OF TARFELTING, ROOF TREATMENT AND ALLIED WORKS IN QUARTERS AND PUBLIC BUILDINGS B.D. Nayak 1344 995419 Services involving Repair, alterations, additions, replacements, renovation, maintenance or remodelling of the buildings covered above. 14. REPAIR MAINTENANCE OF TARFELTING, ROOF TREATMENT AND ALLIED WORKS IN ALUMINA PLANT P.C. Sahu 1480 995419 Services involving Repair, alterations, additions, replacements, renovation, maintenance or remodelling of the buildings covered above 15. DESILTING OF DRAINS BERMS DRESSING INSIDE NALCO AR AND CISF ESTB. AT NALCO, DMNJ Judhister Dalai 1312 9954 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 995419 Services involving Repair, alterations, additions, replacements, renovation, maintenance or remodelling of the buildings covered above 23. PROVISION OF DRINKING WATER SUPPLY AT PICNIC SPOT Sadashiv Enterprises 1550 995419 Services involving Repair, alterations, additions, replacements, renovation, maintenance or remodelling of the buildings covered above 24. PERIODICAL PAINTING FOR THE BUILDING INSIDE AR AT NALCO, DAMANJODI Jagannath Satpathy 1219 995473 Painting services 25. PERIODICAL PAINTING FOR THE BUILDING INSIDE AR AT NALCO, DAMANJODI Shiva Shakti Construction 1220 995473 Painting services 26. PERIODICAL PAINTING FOR RESI. QTRS. PUBLIC BUILDING AT SEC-1 OF NALCO T/S SV,. DMNJ. M.H. Zaman 1541 995473 Painting services 27. PER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35. REPAIRING, REPLACEMENT, REWINDING AND OVERHAULING OF CEILING FANS OF TOWNSHIP PLANT SADANANDA ENTERPRISES 1394 995469 Services involving Repair, alterations, additions, replacements, maintenance of the installations covered above 36. CONTRACT FOR PHARMACY OUTLET OF NALCO HOSPITAL AT NALCO TOWNSHIP, M R COMPLEX, DAMANJODI APOLLO HOSPITALS ENTERPRISE LTD 1163 999319 Other human health services including homeopathy, unnani, ayurveda, naturopathy, acupuncture etc 37. UP KEEPING CLEANING AND ENSURING HYGENIC CONDITION OF NALCO HOSPITAL AT DAMANJODI RAMESH KUMAR BAGH 1378 999459 Other sanitation services n.e.c. 38. OPERATION MAINT OF BIO-MEDICAL WASTE MANAGEMENT EQUIPMENTS OF NALCO HOSPITAL, DAMANJODI R.K. CONSTRUC-TION 1469 999432 Hazardous waste treatment and disposal services 39. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t services to agriculture, hunting, forestry and fishing 49. HORTICULTURTE DEVELOPMENT AND MAINT WORKS IN TOWNSHIP, NALCO, DAMANJODI P.C. Sahu 1514 998619 Other support services to agriculture, hunting, forestry and fishing 50. HORTICULTURE DEVELOPMENT AND MAINTENANCE WORKS IN TOWNSHIP, NALCO, DAMANJODI S.C. Dash 1513 998619 Other support services to agriculture, hunting, forestry and fishing 51. HORTICULTURE DEVELOPMENT AND MAINTENANCE WORKS IN TOWNSHIP, NALCO, DAMANJODI GREEN AGRO SERVICE CENTRE 1512 998619 Other support services to agriculture, hunting, forestry and fishing 52. HORTICULTURE DEVELOPMENT MAINTENANCE WORK AT SABARI LAKE COMPLEX N.C. TURUK 1490 998619 Other support services to agriculture, hunting, forestry and fishing 53. DEVELOPMENT OF PARK ..... X X X X Extracts X X X X X X X X Extracts X X X X
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