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TMI Blog2022 (4) TMI 1335X X X X Extracts X X X X X X X X Extracts X X X X ..... ent which is required to run the business operations smoothly. The plant is about 35 kms away from Ahmadabad and most of our employees are travelling to various part of Ahmedabad. ii. All company employees shall be eligible to avail the transportation facility. iii. The transportation benefits will be provided with no cost to employees/travellers. iv. All cost related to this benefit shall be borne by the company. Canteen Facility and Deduction Canteen Facility details are as follows: Nutritious food is provided in the canteen at a subsidised rate. These subsidized rates are subject to revision at the discretion of Management. The rates so fixed are for the month irrespective of number of days on which the canteen facilities are availed. Canteen facilities are not available in third shift. Snacks are catered for the employees working in the Third shift. 2. M/s. Emcure submitted that in order to provide the said canteen and bus transportation facility, it engaged third party service providers who are in turn providing the said canteen and bus transportation facilities to the employee. Since, the said services are provided by the third-party service providers, the servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rance of business' is not defined under the CGST Act. However, the term Business has been defined under Section 2 (17) of the CGST Act and reads as - Section 2 (17) "business" includes-- (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; (d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business; (e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members; (f) admission, for a consideration, of persons to any premises; (g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation; (h) services provided by a race club by way of totalisator or a licence to book m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Trade and Taxes [(2013) 59 VST 524 (Del.)] 5. M/s. Emcure submitted that without prejudice to the above, the canteen facility provided by it is excluded from the scope of supply in terms of Clause (a) of Section 7 (2) of the CGST Act. Clause (a) of Section 7 (2) of the CGST Act which reads as below: "Section 7 (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" "SCHEDULE III [See section 7] ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES 1. Services by an employee to the employer in the course of or in relation to his employment." 5.1 It is submitted that Section 7 (2) begins with a non-obstante clause and overrides Section 7 (1) of the CGST Act. A plain reading of above section provides that even in case where any activity may be treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rulings of the Hon'ble Advance Ruling Authorities, wherein it is held that no GST is to be included on the recoveries made by a company on canteen facility provided through a third party to their employees: * In Re: M/s Amneal Pharmaceuticals Pvt Ltd., 2021 (9) TMI 1293 - Appellate Authority for Advance Ruling, Gujarat; * In Re: M/s Dishman Carbogen Amics Ltd., 2021 (8) TMI 836 - Authority for Advance Ruling, Gujarat; * In re: M/s Bharat Oman Refineries Limited 2021-VIL-73-AAAR The Madhya Pradesh Appellate Authority For Advance Ruling * M/s Jotun India Private Limited, [2019-TIOL-312-AAR-GST]. Maharshtra Authority for Advance Ruling. * Advance Ruling in the case of M/s POSCO India Pune Processing Centre Private Limited [2019 (2) TMI 63]. 6. M/s. Emcure submitted that the employee recoveries for providing bus transportation facility is not covered under the ambit of "supply" under Clause (a) of Section 7 (1) of the CGST Act. 6.1 M/s. Emcure procures bus transportation services from a third-party bus transportation service provider for transportation of its employees in Non-AC buses. Accordingly, the said service provider issues tax invoice with applicable GST. The said b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of passengers through buses are covered under Tariff 996411. Therefore, the local passenger transportation facility within the city in the given case in hand, if classified as service would merit classification under the Tariff 996411 only. Further, the Explanatory Notes issued by the CBIC also provides that the services provided by bus within city limits would be very well classified under Tariff 996411. The Explanatory Notes also provides that the renter defines the travel routes in case of passenger transportation services. In the given case, the said conditions are satisfied. 6.7 M/s. Emcure submits that even in case where the bus transportation facility provided by them to its employees amount to supply, the said services would be exempted by virtue of E. No. 15 (b) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (hereinafter referred to as Exemption Notification). The relevant entry is reproduced below: SI.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (Percent) Condition 15 Heading 9964 Transport of passengers, with or without accompanied belongings, by - (a) air, embarking from or terminating in an airpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ruling that canteen services and bus services by the Applicant to the employees is not covered under the definition of 'supply' under GST and hence not liable for payment of GST. 7. M/s. Emcure submitted that it is eligible to avail the input tax credit for the GST paid on purchase of canteen services in terms of Section 16 of CGST Act. The relevant provisions of Section 17(5) of CGST Act reads as follows: '17. Apportionment of credit and blocked credits - (5) Notwithstanding anything contained in sub-section (1) of section 16 and sub- section (1) of section 18, input tax credit shall not be available in respect of the following, namely:- (a) motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely:- (A) further supply of such motor vehicles; or (B) transportation of passengers; or (C) imparting training on driving such motor vehicles; (aa) vessels and aircraft except when they are used-- (i) for making the following taxable supplies, namely:- (A) further supply of such vessels or aircraft; or (B) transp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r both shall be available, where it is obligatory for an employer to provide the same to its employees under any law. As such it is of strong view that the input tax credit on canteen services is not blocked under Section 17(5) of CGST Act and the same is eligible to it. 8. M/s. Emcure submitted that it is eligible to avail the input tax credit for the GST paid on availing bus services in terms of Section 16 of CGST Act. Further, submitted by M/s.Encure, that Section 17(5) had debarred Input Tax Credit on motor vehicles or conveyances used in transport of passengers till the date of the amendment i.e. 01.12.2019. However, with effect from 01.12.2019, Input Tax Credit has been allowed on leasing, renting or hiring of motor vehicles, for transportation of persons, having approved seating capacity of more than thirteen persons (including the driver). 8.1 M/s. Emcure has submitted that it is using motor vehicles having approved seating capacity of more than thirteen persons (including the driver), hence in terms of the legal provisions as above it shall be eligible for Input Tax Credit for the bus services. 9. Question on which Advance Ruling sought: 1. Whether the recoveries made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided that the input tax credit in respect of such goods or services or both shall be available where an inward supply of such goods or services or both is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; (ii) membership of a club, health and fitness centre; and (iii) travel benefits extended to employees on vacation such as leave or home travel concession: Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force.] In light of the above, the issue raised by the applicant should be viewed in light of the various ruling, facts and circumstances submitted by the applicant and may be decided on merits. FINDINGS: 12. We find M/s. Emcure has arranged a canteen for its employees, which is run by a Canteen Service Provider. As per their arrangement, part of the Canteen charges is borne by M/s. Emcure whereas the remaining part is borne by its employees. The said employees' portion canteen charges is co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that could stand alone as complete sentences. That means they're to be used when you're dealing with two complete thoughts that could stand alone as a sentence. 13.3 We find that semicolon creates a wall for conveying mutual exclusivity between the sub-clauses, in present matter. It is obvious that the legislature intended the said subclauses to be distinct and separate alternatives, with distinctively different qualifying factors and conditionalities 13.4 Thus, we hold that Section 17(5)(b)(i) sub-clause ending with a colon and followed by a provisio which ends with a semi colon is to be read as independent sub-clause, independent of sub clause Section 17(5)(b)(iii) and its proviso [of subclause iii]. Thereby, the provisio to section 17(5)(b)(iii) is not connected to the sub-clause of Section 17(5)(b)(i) and cannot be read into it. Judicial Discipline 13.5. i. We find our view is in compliance to judicial discipline as laid down by the H'ble Supreme Court and H'ble High Courts. The relevant extract of H'ble Supreme Court's judgment in the case of PIL of Shri Jayant Verma v. Union of India, dated 16-2-2018 related to the expressions separated by semicolon is as foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her supply of such motor vehicles; or (B) transportation of passengers; or (C) imparting training on driving such motor vehicles; ..... ....... (b) the following supply of goods or services or both- (i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance: .......' 14.1 When enquired during Virtual hearing, Shri Santosh Tapade informed that bus hired for transportation of employees has capacity more than thirteen passengers. We note that ITC on motor vehicle for transportation of persons having approved seating capacity of more than 13 persons is not blocked credit vide Section 17(5) CGST Act. Thereby, hiring of bus of approved seating capacity of more than 13 persons do not falls under blocked credit as provided under Section 17 (5)(b)(i) CGST Act. 15. In conspectus of aforementioned Discussion and Findings. We pass the Ruling: RULING 1. GST, at the hands of M/s Emcure, is not leviable on the amount representing the emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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