9911796707
TMI Blog2023 (5) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore the consideration received by the applicant as the value of supply including the amounts received in the name of bonus will be chargeable to tax at the rate of 2.5% under each of CGST - It is 5% on the entire bonus amount if no commission is taken/deducted, in the capacity as an intermediary, from the amount transferred by the service recipient. The applicant s point of view is that, they are taking the bonus consideration from service recipient which is meant to be paid to their employees, by acting as an intermediary, because of which they are issuing Invoice, for the bonus amount to be received, with GST Rate of 18%. If the applicant retains a portion of the Lump Sum amount received for payment of bonus, which is received from their service recipient to pay the same to their employees, in the form of commission then he is liable to pay GST at the rate applicable to Intermediary services on the commission retained and rest of the amount, after excluding the commission from the bonus, shall be included in the taxable value pertaining to the canteen services as the bonus is also paid by the service recipient in relation to the canteen services provided by the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view according to Section 2 (32) of CGST Act, 2017 - consideration in relation to the supply of goods or services or both includes - (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; That their Service recipient is claiming that, they have to charge @5% by considering the reimbursement of expenses as Part of Canteen Service and they are not ready to accept it as separate service. That as the reimbursement of the bonus was not part of agreement; they agreed only for canteen service, so, the only service to be considered here was to be as canteen service by issuing Invoice @ 5%. But that the applicant s point of view is that, they are taking this consideration for paying their employees, by acting as an intermediary, so they are ready to issue Invoice by applying 18% GST Rate. Hence the applicant requested clarification regarding relevant rate of tax under GST. 4.2 Company Background: The applicant M/s. Foodsutra Art Of Spi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply and not included in the price actually paid or payable for the goods or services or both; Similarly, the definition of consideration at sub section 31 of Section 2 of CGST Act, 2017 includes any payment made or to be made in response to the supply of goods or services. A combined reading of Section 15 and definition of consideration in the CGST Act, 2017 reveals that all payments made in respect of a supply constitutes the value of supply on which tax shall be levied under the charging section i.e., Section 9 according to the rates applicable in the notifications issued under the Act. According to the averments made by the applicant they are providing only canteen services to their recipient M/s. ITC Limited. There are no other ancillary or incidental services provided by them. Therefore the amounts received by them are in relation to supply of canteen services only. This amounts form the value of supply as defined in clause (b) of sub section (2) of Section 15 of the CGST Act, 2017 which are taxable under Section 9 of CGST Act, 2017. In the explanation to Notification No. 11/2017 dt: 28.06.2017 the restaurant services are defined as follows: [(xxxii) Restaur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rescribed and shall be paid by the taxable person. 9.3 The Section 15 of the CGST Act, 2017 15. Value of Taxable Supply. (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. (2) The value of supply shall include (a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier; (b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both; (c) incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only canteen services to their recipient M/s. ITC Limited. There are no other ancillary or incidental services provided by them to M/s. ITC Limited. The applicant has submitted that the issue under consideration involves receipt of amounts from the service recipient as Bonus to be given to the employees of the service provider. Thus it is a fact that the amounts received are in relation to supply of Canteen service only and probably as an inducement/response to the employees of the service provider for providing the said canteen services with quality. Therefore the amounts received by them are in relation to supply of canteen services only. These amounts form the value of supply as defined in clause (b) of sub section (2) of Section 15 of the CGST Act, 2017 which are taxable under Section 9 of CGST Act, 2017 with certain conditions. 9.7 In the explanation to Notification No. 11/2017 dated 28.06.2017 the restaurant services are defined as follows: [(xxxii) ―Restaurant service‟ means supply, by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, provided by a restaurant, eating joint including mess, cante ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST at rate of 5% on the rest of the amount, which is arrived after excluding the commission from the entire bonus, as it would be included as value of supply of canteen services in accordance with Section 15(2) of the CGST Act, 2017. 9.11 If the applicant does not retain a portion of the Lump Sum amount received for payment of bonus in the form of commission then the entire bonus amount shall be included in the taxable value pertaining to the canteen services as the bonus is also paid by the service recipient in relation to the canteen services provided by the applicant to the recipient. Therefore the consideration received by the applicant as the value of supply including the amounts received in the name of bonus will be chargeable to tax at the rate of 2.5% under each of CGST SGST Acts each in light of above discussion. Therefore he is liable to pay GST at rate of 5% on the entire Lump Sum amount received for payment of bonus. 10. In view of the foregoing, the ruling is given by Central Member as under: In view of the above discussion, the questions raised by the applicant are clarified as per the below rulings: QUESTIONS RUL ..... X X X X Extracts X X X X X X X X Extracts X X X X
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