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TMI Blog2023 (7) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... extend the benefit of non-levy of GST in terms of the above cited Circular dated: 06.07.2022, as already narrated above. The appellant relied on the advance ruling given in the case of HAZIRA LNG PVT LTD VERSUS C.S.T. -SERVICE TAX - AHMEDABAD [ 2022 (11) TMI 437 - CESTAT AHMEDABAD] wherein it has been ruled that there would be no tax implications in case of mere cost sharing agreements - In this case, the appellants does not enter into an agreement with employees for providing common service both to the appellants and employees by a third party caterer. But. here the third party caterer provides service to the appellant who in turn provides such service within the factory premises to the employees at the reduced subsidized price and thus, there is no question of sharing of cost between the appellant and employees. In the instant case, the Appellant had established the canteen in their premises and has been bearing a part of the cost for providing the food/beverages to their employees and a part of the cost is being collected from employees, as fixed by the Managing Committee of the Appellant. The supply of the food/beverages, although at subsidized rates, by the Appellant/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and have the same provisions in like matter and differ from each other only on few specific provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act, 2017 would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act, 2017. The subject appeal was filed under Section 100 (1) of the Tamil Nadu Goods and Services Tax Act, 2017 / Central Goods and Services Tax Act, 2017 (hereinafter referred to the Act ) by M/s Kothari Sugars and Chemicals Limited (hereinafter referred to as Appellant ). The Appellant is registered under the GST Act vide GSTIN 33AABCK2495TTZP. The appeal was filed against the Order No. 20/AAR/2022 dated 31.05.2022 passed by the Tamil Nadu State Authority for Advance ruling on the Application for Advance ruling filed by the Appellant. 2.1 The Appellant has stated to be engaged in the manufacture of sugar, molasses, denatured ethyl alcohol, and ethyl alcohol. They have stated that they have two manufacturing units located at Kattur and Sathamangalam, wherein around 300 workers have been employed. As per Section 46 of the Factories Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of canteen facility was due to the mandate prescribed in the factories Act. 1948; they furnished the following ease laws in their support; (i) Bhimas hotels P Ltd [2017(3) GSTL 30 (A.P)] (ii) CCE V Rattan Melting Wire Industries [2008 (231) ELT 22 (SC)] (iii) UOI Vs Arviva Ind (I) Ltd [2007 (209) ELT 5 (SC)] (iv) Jotun India P Ltd [2019- TIOL-312-AAR-GST] (v) Ranadey Micronutrients Vs CCE [1996 (87) ELT 19 (SC) (vi) Gujarat state fertilizers Chemicals Ltd vs CCL [2016 (45) STR 489 (SC)] (vii) Posco India Pune Processing Center Private Limited [2019 (21) G.S.T.L. 351 (A.A.R. - GST)]. (viii) Glaxo Smithkline Pharmaceuticals Ltd vs Commr. of ST Mumbai [2014 (360 STR 349 (Tri-Mum)] (ix) Ion Trading India private limited [2020 (32) G.S.T.L. 608 (A.A.R.-GST-U.P.)] (x) Historic Resort hotels Vs CCE Jaipur II [2018 (9) GSTL 422] (xi) AAAR -Bharat Oman Refineries Ltd [2021-TIOL-36-AAAR-GST] (xii) AAR-Dakshina Kannada Coop Milk Producers union ltd [2021 (55) GSTL (AAR-GST-KAR)] (xiii) AAR-Emeure Pharmaceuticals ltd [2022-TIOL-10-AAR-GST] (xiv) AAR-Dishman Carbogen amcis ltd [2022 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied on ruling of the Gujarat Authority for Advance Ruling in the case of M/s. ZYDUS LIFE SCIENCES LTD. [2022-TIOL-118-AAR-GST], wherein it ruled in favor of the assesse on transport and canteen facilities extended by the assesse and the consequent recoveries made from them. ii. Further, the Appellant also relied on the recent case of HAZIRA LNG PVT LTD [FINAL ORDER No. A/11349/2022 DATED 02.11.2022], wherein it has been ruled that there would be no tax implications in ease of mere cost sharing agreements. iii. Accordingly, in the instant case where the Appellant recovers from the employees a portion of canteen charges on account cost sharing arrangement between the employees and the Appellant as per Factories Act and docs not amount to consideration. iv. Further. the Appellant further stated that that there are no two separate transactions and there is only one service transaction for provision of canteen services and hence the appellant/representative modified the record of PH by deleting the said para 4 of the record of Ph. The above modification was made as per S.No.(viii) of the instruction provided in board Circular (Central Board of Indirect Taxes Custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges to the employees of the Appellant. They are:- i) Supply of food/beverage by the caterer/service supplier to employer; and ii) Supply of food/beverages by the Appellant/employer to their employees. 7.4 In respect of the first transaction, the caterer/ third party service supplier has been supplying food/beverage to the Appellant/employer for which the caterer/third party service supplier receives a consideration from the Appellant; on which admittedly the Appellant has been paying GST at the applicable rates. 7.5 Similarly, in the second transaction the Appellant/employer is supplying the service of providing food/beverages to their employees for which the Appellant is receiving consideration, although at the subsidized rate, from their employees. 7.6 It is not the case of the Appellant that they merely provide a place /shelter in their factory premises to facilitate the caterer/third party service supplier to provide food/beverages by the Appellant/employer to their employees; nor that the caterer/third party service supplier has been supplying the food/beverages to the employees of the Appellant for a consideration being charged directly by the caterer/third ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployees in this case cover the subject facility being offered by the Appellant, the benefit of the non-levy of GST could be extended only to the extent of the consideration being borne by the Appellant out of the total cost for supply of the food/Beverages, but not to the extent of the consideration being collected at the subsidized rates, by the Appellant from their employees. 7.10 the Appellant has relied upon the above mentioned Circular dated: 06.07.2022 and the ratio of 6 (six) decisions to strengthen their claim that the said Circulars were binding on the Department. But, the fact of the matter is that, since the Appellant had no explicit contractual agreement with regard to the canteen facility, the same cannot be equated to perquisites mentioned in the said Circular. Hence, even as per the Circular cited by the Appellant, the canteen facility goes out of the purview of perquisites as the canteen facility was not provided in terms of contract between the employer and employee. 7.11 Another contention of the Appellant is that the consideration of a part of the cost of food/Beverages being received by them from their employees is a mere cost sharing arrangement. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken between associated enterprises on common Junction service received from a third party service provider in respect of which each enterprise had to bear the allocated cost. Where the activities under taken under the cost sharing agreement do not amount to provision of Service in terms of the decision of Hon ble Apex Court in case of Gujarat State fertilizers Chemicals Ltd. (supra), the demand of Service Tax on the activities undertaken under the cost sharing agreement cannot be sustained. Held that cost sharing scenario need not result in service where service is commonly received from a third party supplier. In this case, the appellants does not enter into an agreement with employees for providing common service both to the appellants and employees by a third party caterer. But. here the third party caterer provides service to the appellant who in turn provides such service within the factory premises to the employees at the reduced subsidized price and thus, there is no question of sharing of cost between the appellant and employees. Further. the advance ruling would be applicable to the applicant who filed advance ruling application and factual matrix of each would di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n raising one invoice to the extent of the value of the supply being recouped from the employees by the company; and the other invoice to the extent of the balance amount which was being borne by the Appellant, it is obviously at the instance of the Appellant and is for the case of accounting the expenditure and the income at the subsidized rates; but has no relevance for the levy of GST on that part of the consideration, although at subsidized rates, being charged by the Appellant/employer from their employees for supply of the food/beverages. 7.15 The Schedule II to the CGST/SGST Act, 2017 describes the activities to be treated as supply of goods or supply of services. As per clause 6 of the Schedule, the following composite supply is declared as supply of service: Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is-for cash, deferred payment or other valuable consideration. 7.16 In the instant case, the Appellant had established the canteen in their premises and has been bearing a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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