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TMI Blog2022 (2) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... d factual position that the service charge received by the assessee, both, from the customers as well as affiliates is offered as income. So far as the face value of the meal voucher is concerned, as per clause 8 of RBI Master Circular placed in the paper book, the amount received from the customers towards issuance of meal vouchers has to be kept in escrow account maintained with any Scheduled Commercial Bank. The Master circular mandates that the amount so deposited in the escrow account can only be used for making payment towards reimbursement of the face value of the meal voucher to the affiliates. The Government Regulations make it clear that the face value of the meal vouchers cannot be used by the assessee for any other purpose. Thus, it is very much clear that the amount received by the assessee from customers for providing the meal vouchers is not an income of the assessee but has to be used only for the purpose of making payment to the affiliates towards redemption value of vouchers. The entire scheme relating to issuance of printed meal vouchers read with PSS Act and RBI Master Circular make it clear that the assessee is merely a facilitator or a medium for enabling paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhyarujina, AR For the Revenue : Mr. Sunil Umap, DR ORDER PER SAKTIJIT DEY, JM. Captioned appeals by the same assessee arise out of four separate orders of learned Commissioner of Income Tax (Appeals)-60, Mumbai for the assessment years 2013-14, 2014-15, 2015-16 and 2016-17. 2. At the outset, we must observe, these appeals were earlier disposed of by a common order dated 07.10.2019. However, while deciding the miscellaneous applications filed by the assessee, the order was recalled for fresh hearing of the appeals. This is how the appeals came up for hearing before this Bench. 3. The controversy in the present set of appeals is confined to applicability of section 194C to certain payments made by the assessee to its affiliates. 4. Relevant material facts for disposal of the present appeals are, the assessee, a resident company, is stated to be engaged in the business of issuing meal vouchers to its clients/customers through which certain benefits in kind is provided by the clients to their employees. The employees of the clients/customers use these meal vouchers at specified places, such as, restaurants, eating places, caterers, super markets, etc., wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 194C of the Act. However, when making payment to the affiliates, the assessee is not deducting any tax at source, though, it has entered into similar type of agreement with the affiliates. He observed, while the assessee is deducting tax at source on payment made to caterers; however, it is not doing so in respect of payment made to restaurants and super markets by taking the plea that the payments are in the nature of reimbursement. He observed, the end-users of the meal vouchers, i.e. the employees of the clients of the assessee are not connected to the assessee. Therefore, affiliates are acting as agents of the assessee while honouring the meal vouchers as per the agreement between the assessee and its clients. On verifying the terms of the agreement, the assessing officer observed that the affiliates have to do specific work before claiming reimbursement from the assessee. The works to be performed are as under:- 1. Examining the security features of the sodexo vouchers 2. Cancellation of vouchers with specific stamp after supplying food other articles in lieu of meal vouchers 3. All valid vouchers shall be kept in reimbursement envelope and after duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of prepaid payment instruments in India, the assessee issues meal vouchers which can be utilized for the purchase of food and non alcoholic beverages at the outlets of assessee s affiliates. He submitted, the affiliates are persons/entities, who own and operate shops like restaurants and super markets, etc. and who enter into agreement with the assessee to honour the vouchers issued by it. Proceeding further, he submitted, the assessee enters into contracts with customers to provide the customers with vouchers that can be used at the shops of the affiliates of the assessee. He submitted, the meal vouchers can be used by the employees of the customers/clients only for purchasing food and non alcoholic beverages from the outlets of the affiliates. He submitted, while issuing meal vouchers to customers/clients, the assessee receives the face value of the voucher alongwith service charge for providing the voucher. He submitted, the face value of the vouchers issued to the customers is to be exclusively used to settle/reimburse the face value of the vouchers when they are presented to the affiliates. He submitted, the face value of the vouchers received from clients/customers, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot required to be made when payment is made for serving food in a restaurant in the normal course of running of the restaurant/caf . Thus, he submitted, the demand raised under section 201(1) and 201(1A) has to be struck down. 9. Strongly relying upon the observations of the assessing officer and learned CIT(A), the learned departmental representative submitted, the agreement between the assessee and the affiliates is not merely a contract for payment but also involves work element. He submitted, as per the instruction of the assessee, the affiliates are honouring the meal vouchers and receiving the payment from the assessee. Therefore, they are not only acting as agent of the assessee but are performing certain work on behalf of the assessee. Therefore, the assessee was required to deduct tax under section 194C of the Act. 10. We have carefully considered the rival submissions and perused the material on record. The factual matrix reveals that the assessee is operating a semi-closed prepaid payment system being authorized by RBI in terms of section 7 of the Payment and Settlement System Act, 2017. Under the aforesaid scheme, the assessee issues printed paper vouchers to be u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s when the user purchases food and non alcoholic beverage from the affiliates. In other words, the assessee is merely providing the service of an alternative mode of making payment. 12. In this context, it is relevant to refer to the decision of the Hon ble Supreme Court in assessee s own case i.e. Solexo SVC Pvt. Ltd. vs State of Maharashtra [2016] 331 ELT 23. Though, the aforesaid decision was rendered in the context of levy of octroi by treating the meal vouchers as goods, however, certain observations of the Hon ble Supreme Court regarding business model of the assessee would be very much relevant for deciding the issue at hand. After analyzing the business model of the assessee, the Hon ble Supreme Court has observed that the assessee had made arrangements with affiliates for supply of goods against vouchers to simply help the customers by facilitating the provision for making available food items etc. of a particular amount represented by the vouchers to the employees of the customers. The Hon ble Court observed, though, the vouchers bear a particular value and for such value goods are provided to the employees, however, the goods are not provided by the assessee but by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heet. It is a fact on record that both the Assessing Officer and learned CIT(A) have held that the payment made by the assessee towards reimbursement of meal voucher is for work performed by the affiliates, hence, comes within the ambit of section 194C of the Act. At this stage, it is relevant to look into the provisions of section 194C of the Act. A reading of the aforesaid provision as a whole, makes it clear that payment made to contractors for carrying out any work including supply of labour has to be subjected to deduction of tax at source. The definition of work under clause 4 of Explanation to section 194C is as under : (iv) work shall include- (a) advertising; (b) broadcasting and telecasting including production of Programmes for such broadcasting or telecasting, (c) carriage of goods or passengers by any mode of transport other than by railways; (d) catering; (e) 44 (e) manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer or its associate, being a person placed similarly in relation to such customer as is the person placed in relation to the assessee u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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