9911796707
TMI Blog2023 (4) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... actory premises is located far away from the city limits, the applicant provides canteen facility by appointing a canteen service provider [ for short - CSP]. The employees are issued an ID card while joining which can be used to avail this canteen facility. They are charged only for the days on which an employee has punched his ID card and a pre-determined percentage is deducted from the salary payable to the respective employee. The facility is tabulated below for ease of reference: Sr. No. Type of employee Mode of availing facility Basis of recovery Mode of recovery Book treatment ITC availment GST payment 1 Full time employees [at factory and corporate office]. ID card or biometric. Based on consumption Subsidized value Amount deducted from employee is credited to canteen expense account. Amount charged by CSP is booked as an expense in P&L A/c. No ITC is being availed GST is paid @ 5% on the basis of no. of punches in the system on the value charged by the CSP. 5. The applicant has further set up the canteen facility in a demarcated area within its factory premises & also at their corporate office. The scope of work agreement [SOW], depicting the responsibilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant; * that no GST is to be levied on the third party canteen charges collected by employer from employee; * that they wish to rely on the below mentioned case laws/rulings,- [a] Amneal Pharmaceuticals P Ltd [TS-569-AAAR (Guj)-2021-GST] [b] Troika Pharmaceuticals Ltd [Advance Ruling no. Guj/GAAR/R/22/38] [c] Cadila Healthcare [Advance Ruling Guj/GAAR/R/22/19] [d] Dishman Carbogen Amcis Ltd [Advance Ruling Guj/GAAR/R/22/2021] [e] Dakshina Kannada Coop Milk Producers Union Ltd [2021 (8) TMI 352] [f] R J Tolsma vs Inspecteur der Omzetbelasting Leewarden (C-16/93 (judgement of sixth Court, sixth chamber) [g] Bai Mumbai Trust [Commercial suit (I) MP/ 236/2017] [h] IIT [1976(38) STC 428 (All); [i] University of Delhi [AIR 1963 SC 1873] [j] Cricket Club of India [AIR 1969 SC 276] [k] TATA Motors Ltd [GST-ARA-23/2019-20/B-46] [l] TATA Power Company Ltd [GST-ARA-99/2019-20/B-92] [m] Posco India Pune Processing Centre P Ltd [GST-ARA 36/18-19/B-110] [n] Jotun India P Ltd [2019 (10) TMI 482] [o] Troikaa Pharmaceuticals Ltd [Guj/GAAR/R/2022/38] [p] Hindustan Coca Cola Beverages P Ltd [2014-TIOL-2460-CESTAT-Mum] * that there was no intention on the part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he applicant & is provided solely on account of a statutory obligation case on the applicant. 9. The applicant has filed this application for advance ruling to ascertain the GST implication on the existing arrangement of canteen facility being provided to all the employees at the factory and the corporate office of the applicant. Vide the aforesaid application, the applicant has raised the following question for advance ruling viz,- (i) Whether the subsidized deduction made by the applicant from the employees who are availing food in the factory/corporate office would be considered as a 'supply' under the provisions of section 7 of the CGST Act, 2017 and the GGST Act, 2017? (ii) If yes, whether GST is applicable on the amount deducted from the salaries of its employees? (iii) If yes, on what portion GST will be applicable ie amount paid by the applicant to the canteen service provider or only on the amount recovered from the employees? (iv) Whether ITC of GST charged by the canteen service provider would be eligible for availment to the applicant? 10. Personal hearing was granted on 9.2.2023 wherein Shri Mitesh Jain and Shri Mihir Patel appeared and reiterated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es or transactions inter se shall be deemed to take place from one such person to another ;} (b) import of services for a consideration whether or not in the course or furtherance of business; 2[****] and (c) the activities specified in Schedule I, made or agreed to he made without a consideration; 3[****] (d) 4[*****] 5[(1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall he treated either as supply of goods or supply of services as referred to in Schedule II.] (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 he notified by the Government on the recommendations of the Council. shall be treated neither as a supply of goods nor a supply of services. (3) Subject to the provisions of sub-sections (1), (1A) and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as - (a) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold true for free housing to the employees, when the same is provided in terms of the contract between the employer and employee and is part and parcel of the cost-to-company (C2C). * Circular No. 172/04/2022-GST S.No. Issue Clarification 3. Whether the proviso at the end of clause (b) of subsection (5) of section 17 of the CGST Act is applicable to the entire clause (b) or the said proviso is applicable only to sub-clause (iii) of clause (b)? 1. Vide the Central Goods and Service Tax (Amendment Act) 2018, clause (b) of subsection (5) of section 17 of the CGST Act was substituted with effect from 01.02.2019. After the said substitution, the proviso after sub clause (iii) of clause (b) of sub-sect ion (5) of section 17 of the CGST Act provides as under: "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. " 2. The said amendment in sub-section (5) of section 17 of the CGST Act was made based on the recommendations of GST Council in its 28th meeting. The intent of the said amendment in subsection (5) of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The exception being Schedule I, which includes the activities made or agreed to be made without a consideration and Schedule III, which includes activities which shall be treated neither as a supply of goods or services. The applicant's case is that they employ 2745 persons who are full time employees and who have been provided with canteen facility in terms of section 46 of the Factories Act, 1948. We find that the applicant is paying GST @ 5% in terms of the invoices raised by the CSP. The applicants primary role is that he provides a demarcated space and that the amount is paid by him to the CSP [a part of which is collected from the employees] on behalf of the employees for administrative convenience. As is already mentioned, the applicant's contribution is treated as staff welfare expenses in his books of accounts. 17. Now in terms of Circular No. 172/04/2022-GST, it is clarified that perquisites provided by the 'employer' to the 'employee' in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST when the same are provided in terms of the contract between the employer and employee. We find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restaurant or eating place]. On going through the website of the applicant https ://www.cadilapharma.com, the Corporate Office of the applicant is situated at Sarkhej-Dholka Road, Bhat, Ahmedabad, India, 382210. The factory of the applicant is located at Ankleshwar, Dholka, Kadi. The corporate office of the applicant is not located within the precincts of the factory. However, the corporate office would fall within the ambit of the term 'establishment' as defined under section 2(c) of the Gujarat Shops and Establishment (Regulation of Employment and Condition of Service) Act, 2019, which states as follows:- (c) "establishment" means an establishment which carries on, any business, trade, manufacture or any journalistic or printing work, or business of banking, insurance, stocks and shares, brokerage or exchange or profession or any work in connection with, or incidental or ancillary to, any business, trade or profession or manufacture; and includes, - (i) establishment of any medical practitioner (including hospital, dispensary, clinic, polyclinic, maternity home and such others), architect, engineer, accountant, tax consultant or any other technical or professional co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employees working on permanent basis at their factory and the corporate office; * that section 17(5)(b) ibid, was amended on 1.2.2019, and is reproduced supra', * that the applicant is mandated vide section 46 of the Factories Act, 1948 to provide canteen facility to its employees within the factory premises and in terms of Section 23 of the Gujarat Shops and Establishment (Regulation of Employment and Condition of Service) Act, 2019 to provide canteen facility to its employees at the Corporate office; * that circular no. 172/4/2022-GST clearly clarifies that post substitution, effective from 1.2.2019, based on the recommendation of the GST council in its 28th meeting, the proviso after sub clause (iii) of clause (b) of Section 17(5) of the CGST Act, 2017 is applicable to the whole of clause 17(5)(b), ibid. 22. In view of the foregoing, we hold that Input Tax Credit will be available to the appellant in respect of food and beverages as canteen facility is obligatorily to be provided under the Factories Act, 1948, read with Gujarat Factories Rules, 1963 and Gujarat Shops and Establishment (Regulation of Employment and Condition of Service) Act, 2019 as far as provision o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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