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TMI Blog2023 (11) TMI 949X X X X Extracts X X X X X X X X Extracts X X X X ..... ction with and ancillary to his main activity of manufacture and supply of automotive components - Further, in terms of Section 2(17) (c), the volume of transaction is immaterial for the purpose of coverage under Business , therefore, even if supply of food is quite insignificant activity in terms of volume of transaction, still in terms of clause (c) of the aforesaid section ibid, the activity of supply of food, is a supply within the meaning of supply under Section 7 of the CGST Act. 2017. In other words, clause (b) and (c) of definition of business covers the activity of supply of foods, within the definition of business . Employment Agreement lists out the compensation which is agreed to be granted by the employer to the employees towards their services. If any perk is mentioned in the employment contract, then it becomes binding for the employer to provide the same to the employees, otherwise such an employer can be sued in the court of law for the breach of condition of employment contract. Therefore, anything provided beyond the employment contract, is a part of sweet will or largesse on the part of employer and cannot be insisted upon by an employee. Viewed from this angle, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examining its applicability. Since the contract workers are not employees of the Appellant, therefore, the benefit of the above proviso will not be applicable in respect of contract workers but will be limited only with respect to the employees. As second proviso to Section 17(5)(b) inserted vide CGST Amendment Act, 2018, effective from 1.2.2019, is applicable to the whole of clause (b) of sub-section (5) of Section 17 of the CGST Act, 2017, therefore, Input Tax Credit will be available to the Appellant in respect of food beverages as canteen facility, is obligatorily to be provided under the Factories Act, 1948, to its employees working in the factory . Input Tax Credit will be available in respect of such services provided by canteen facility to its direct employees but not in respect of other type of workers including contract employees/Workers, visitors etc. From the facts of the case, it is clear that Canteen Contractor is providing Restaurant Service to the Appellant which is chargeable to GST @5% rate in terms of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017, as amended, without availment of ITC. Under explanation to the aforesaid entry, it has been clarifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act shall be binding only:- (a) on the applicant who had sought it in respect or any matter referred to in sub-section (2) of Section 97 for advance ruling: (b) on the concerned officer or the jurisdictional officer in respect of the applicant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed; 4. Under Section 104(1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section (1) or Section 101 has been obtained by the Appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab initio and thereupon all the provisions of this Act or the rules made there-under shall apply to the Appellant as if such advance ruling has never been made. 1. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are in pari materia and have the same provisions in like matter and differ from each other only on few specific provisions. Therefore, unless a mention is specifical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR-21/2021-7865-68 dated 22.03.2023 has ruled as follows: Question 1: Whether the subsidized deduction made by the Applicant from the Employees who are availing food in the factory would be considered as a supply by the Applicant under the provisions of Section 7 of Central Goods and Service Tax Act, 2017 and Himachal Pradesh Goods and Service Tax Act, 2017. Answer: Answered in the Affirmative. Question 2: Whether GST is applicable on the nominal amount deducted from the salaries of its employees? Answer: Answered in the Affirmative. Question 3 : Whether GST would be applicable on the nominal amount deducted from the Manpower supply contractor in case of contractual employees? Answer: Answered in the Affirmative. Question 4: Whether Input Tax Credit (ITC) of the GST charged by the Canteen Service Provider would be eligible for availment to the Applicant? Answer: Answered in the Negative. 5. Aggrieved by the decision of the AAR in the Order No. HP-AAR-21/2021-7865-68 dated 22.03.2023, the Appellant i.e. M/s Federal-Mogul Anand Bearings India Limited. Plot No. 5, Sector 2, Tehsil Kasauli, Parwanoo, Solan, H.P. preferred the subject appeal. The grounds of appeal, inter alia, are as fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Canteen Service Provider from the Appellant for the Canteen services (i.e. open market value instead of actual recovery made from the employees) Contractual employees - GST is paid on the actual recovery from Manpower Supplier towards meals and snacks deemed as open market value. (vii) That the Appellant is liable to pay to the Canteen Service Provider, for establishing the canteen set-up. who raises GST invoice with tax rate of 5%. The Appellant does not avail ITC of the GST component paid there-under. (viii) That Section 46 of the Factories Act, 1948 provides that any specified factory wherein more than 250 workers are ordinarily employed, a canteen or canteens, shall be provided and maintained by the Occupier for the use of the workers. In this regard, the Appellant shall also refer to Section 2(n) of the Factories Act, 1948 which defines the term occupier of a factor)- to mean the person who has ultimate control over the affairs of the factory . In the instant case, the Appellant has the ultimate control over the affairs of the factory and hence will be treated as the occupier. Therefore, the Appellant is mandated to provide and maintain canteen for the use of its empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period on behalf of the employees and a portion of the amount paid by the Appellant is recovered from the employees and the balance amount which is borne by the Appellant, is treated as employee benefit / welfare expenses. (xv) That for the sake of reiteration, the Appellant would like to submit that such canteen facility is set up by the Appellant out of the mandate laid down by the Factories Act, 1948. (xvi) That the Appellant had relied on the following rulings by various AARs at the Advance Ruling Authority stage, where it has been commonly held that GST is not leviable on the amount representing employees portion of the canteen charges, which is collected by the Appellant and paid the canteen service provider: Gujarat AAAR in the case of Amneal Pharmaceuticals Pvt. Ltd Karnataka Authority of Advance Ruling in the case of Dakshina Kannada Cooperative Milk Producers Union Ltd; Maharashtra AAR in the case ofEmcure Pharmaceuticals Limited Judgement of European Court of Justice in the case of R. J. Tolsma Vs Inspecteur der Omzetbelasting Leeuwarden in case C-16/93 (Judgement of the Court, Sixth Chamber) The above decisions were not considered by the Learned Authorities while passin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny charged a nominal amount from its employees for the canteen facility. The authority ruled that The payment of the meals is being made by the applicant in bill to the canteen vendor. In this matter, the authority is of view that the transaction/deduction of nominal amount from the salary of the employees at fixed rate is outside the preview of the taxability under the GST Act. (xx) That the Appellant places reliance on the decision of the Maharashtra Authority for Advance Ruling in the case of Syngenta India Limited (MANU/AR/0008/2022) wherein the authorities held that GST would not be payable on the recoveries made from employees towards providing parental insurance as the same does not amount to supply of service under the GST Laws. (xxi) That the Appellant places reliance on the decision of the Maharashtra Authority for Advance Ruling- in the case of Integrated Decisions and Systems India Pvt. LTD (2022 (58) G.S.T.L. 596 (A-A.R. - GST - Mah.), In this case the authorities held that arranging the transport facility for their employees is definitely not an activity which is incidental or ancillary to the activity of software development, nor can it be called an activity done in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be made or agreed to be made for a consideration, thus indicating the requirement of an activity to be done on the part of the supplier in order to trigger the event of supply; (xxv) That as per definition of consideration in terms of Section 2(31) of CGST Act, 2017 and Para 2.3. of the Education Guide, (which lists down the salient features of activities for a consideration , activities without a consideration and payments without activity ), it emerges that an amount cannot be termed as consideration in the absence of a reciprocity between the party who makes the payment and the recipient of the said amount; (xxvi) That the Appellant has demarcated specific space and established other infrastructure for the canteen as mandated under Factories Act and facilitating food to the employees at subsidized rate. The collection of nominal amounts from the employees would not amount to Consideration for supply. (xxvii) That the Appellant places reliance on the decision of the Larger Bench of the Tribunal in case of Commissioner of Service tax vs Bhayana Builders P Ltd ([2013] 38 taxmann.com 221 (New Delhi - CESTAT) (LB)) wherein it was held that consideration must flow from the ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein a question had arisen before the Division Bench of the Karnataka High Court as to whether the activity of the employee in supplying food to its workmen and deducting the same from their wages would constitute sale and it was laid down that such an activity would not come within the ambit of sale, and, therefore, the employer was not liable to payment of sales tax under the Karnataka Sales Tax Act. (xxxii) That the Appellant places reliance on the decision in the case of Bihar Alloy Steels Ltd., and Ors. Vs State of Bihar and Ors, wherein the High Court of Patna Bench (Ranchi Bench) (MANU/BH/0150/1996) held that dominant object of supplying the electricity to the employees was for rendering services as welfare measure and there was no relationship of seller and buyer between the petitioner-company and its employees, but relationship between them was that of master and servant and if as an incident of relationship master and servant any electricity is supplied to the employees of the petitioner-company to some extent free of charges and thereafter maintenance charge of electricity at the rate of twenty-five paise per unit from the wages of the employees is deducted, the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogy Vs. State of Uttar Pradesh Ors. [1976 (38) STC 428 (All.)] it was held that (a) the statutory obligation of maintenance of a hostel which involved supply and sale of food was an integral part of the objects of the Institute; and (b) the running of the said hostel could not be treated as the principal activity of the Institute. Consequently, the Institute was held to not be doing business. c. M /s Jotun India Pvt Ltd [2019 (10) TMI 482] by the Authority for Advance Ruling, Maharashtra, wherein it was held that the recovery of 50% of Parental Health Insurance Premium from, employees does not amount to supply of service under Section 7 of the CGST Act, as the Assessee was not in the business of providing insurance service. (xxxviii) That based on the above, the Appellant submits that the activity of establishing canteen facility in the factory and facilitating supply of food is not in the course of or for the furtherance of businesses of the Appellant. Such facility is extended to employees only as required under law and as a part of the implied employment contract and consequent relationship which is established by the fact that only the employees are allowed to consume food in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mandate specified in the Factories Act. Therefore, irrespective of whether the Appellant has separately entered into an employment i contract for provision of canteen facility, the same is impliedly said to be a part of the existing employment contracts, Moreso when the deduction of canteen charges is being made from the employees payslip. (xliii) That the absence of separate contract for supply considered along with the facts that only employees are allowed to consume foods in the canteen and the collection of nominal amounts is effected through pay slip prove the absence of intention to supply food and separates the activity from the business; that it is only the canteen contractor who is supplying the food to the employees and the Appellant is only recipient of such supply on behalf the employees. They have only provided demarcated space and infrastructure necessary for the canteen facility but not participated in preparation of food and supply of the same to the employees. Thus, it cannot be construed that the Appellant is involved in the supply of food through the canteen concerned; (xliv) That the learned authorities completely ignored the clarification issued by CBIC throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (5) of section 17 of the CGST Act. (xlvii) That further the Appellant places reliance on the ruling passed by the Appellate Authority for Advance Ruling in the case of Bajaj Finance Limited (MANU/AI/0118/2019), it is conceded that the ruling made in the impugned AAAR order is contrary to the interpretation of the legal provision as envisaged by the Board, and since the Board circular is beneficial in nature, the same needed to be applied retrospectively in keeping with the Hon ble Apex. Court Judgement relied upon by the Appellant; that therefore, the finding of the learned advance ruling authority in the impugned order that Input Tax Credit (ITC) is not admissible even on supplies where it is obligatory for the Appellant to provide the same to its-employees as mandated under the Factories Act, 1948 is legally not tenable. Further, the Appellant has a statutory obligation cast under Section 46 of the Factories Act to provide canteen facility to its employees. Hence it is humbly submitted that there is no doubt that the Appellant is entitled to avail ITC on the procurement of food and beverages when the same is made to comply with requirement under law. (xlviii) That the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anteen contractor in their invoice may please be allowed. This follow s the natural corollary and legal stance as allowed by Sec 17(5)(b) of CGST Act as mentioned above and intention of introduction of GST by way of taxing only the value addition at each stage of supply. 6. RECORDS OF HEARING: - 6.1 The case was taken up for hearing on 31.08.2023 at 1500 hrs through video conferencing. Sh. Vishal Aggarwal, CA, appeared on behalf of the applicant and reiterated the contention as made in the written submission. 6.2 During the personal hearing proceedings, Sh. Rajesh Puri, Chief Commissioner, CGST, Chandigarh Zone, Member, AAAR, raised two queries, which were replied by the Learned Counsel. (i) First query was w.r.t. bills raised by Catering Service provider on the applicant M/s. Federal Mogul Bearings India Limited and amount recovered by them from their employees contract workers every month. The background of this query was that as per sample bills, more than 50% amount of the bills received from the Canteen Service provider was being recovered from employees. In this background, the Member of Appellate Authority requested the applicant to provide month-wise value of food services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuted an implied contract. Further, he stated that being a statutory mandate, employee has a right to receive such benefit from employer. 6.6 Dr. Yunus, Commissioner, State Taxes and Excise, Himachal Pradesh, member, AAAR, raised a query as to wherefrom would the Ld. Counsel draw the inference that the services provided by way of canteen facility by the Appellant party, are not supplies under the provisions of the GST Act, as Learned Counsel has harped on the issue that provisioning of Canteen Services is mandated under law and so it cannot be considered as supply? 6.7 To this, the Counsel stated that for something to become supply, it is essential to have element of consideration therein. However, since such activity is statutorily mandatory , there is no discretion in supplying Canteen Services and the Service is not for a consideration. 6.8 Further, Sh. Vishal Aggarwal, CA also submitted that he has nothing more to add and the case be decided as per the facts on record and proceedings of personal hearing. 6.9 Further, the Appellant made additional submissions dated 21.08.2023 (received in the office of the Commissioner, (State Taxes Excise), HP on 06.09.2023), where-in, they int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided by the Appellant to its employees would not amount to supply under GST and accordingly GST is not payable on the amount recovered/representing the employees portion of canteen charges which is collected by the Appellant and paid to the canteen service provider. (e) It is abundantly clear that any services provided by the employer to the employees in terms of the contractual agreement entered into between the employer and employee will not be subjected to GST. As explained in the Appeal memorandum, the Appellant in the present case is providing canteen facility to its employees as per the requirements of the provisions of Factories Act. The deduction of the nominal amount is also established from the pay-slips. Copies of sample pay-slips are attached as Annexure-A. Further, the amount charged by the Appellant is fully paid to the third-party contractor and no profit or pecuniary benefit is involved in this activity. Hence, the provision of canteen facility should be excluded from the purview of supply. (f) Therefore, the Appellant humbly submits that the canteen facility provided by the Appellant to its employees cannot be treated as supply and therefore, GST is not payabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces, sale of food or food ingredients; Section 3(1)(o) food business operator in relation to food business means a person by whom the business is carried on or owned and is responsible for ensuring the compliance of this Act, rules and regulations made thereunder; (l) From the above, it is evident that the term food business means any undertaking involved in the activities related to manufacture, processing, packaging, storage, transportation and in distribution of food. It also provides that a food business operator is a person who carries or owns a food business and is responsible for carrying out the compliance of this Act, rules and regulations made under this Act. The Appellant is not involved in any of the activities mentioned above. The Appellant only enters into the contract with a third-party contractor who provides the food to the employees. The Appellant is only a facilitator in the said transaction. (m) Further, according to Regulation 2.1 of Food Safety and Standards (Licensing and Registration of Food Businesses), Regulations 2011, all the food business operators in the country will have to be registered. Since, die Appellant is not a food business operator, the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant submits that the provisions of Section 17(5) of the CGST Act, 2017 will have an overriding effect over Section 16 of the CGST Act, 2017 and the rate notification; (s) Further, the Appellant would also like to submit that, input tax credit availability should not be restricted only to the extent of GST charged by the service provider in respect of canteen facility provided to its direct employees alone since, the proviso to section 17(5)(b) of the CGST Act, 2017 provides that, 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 and in the instant case, the company is providing canteen facility only on the basis of obligation cast under the Factories Act, 1948. As per section 2(1) of the Factories Act, 1948, contract employees are also considered as workers. Under Section 46 of the Factories Act 1948 a canteen shall be provided and maintained by the occupier for the use of the workers (which includes contract employees). Thus. contract employees who are recognized as workers under the Factories Act, are also employees in the context ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larification on various issues of Section 17(5) of the CGST Act 7.23.1 The second issue pertained to interpretations of Section 17(5). In this regard, one of the issues was whether proviso at the end of Section 17(5)(b) of the CGST Act is applicable to entire clause (b) or only to sub-clause (iii) of clause (b). The Law Committee clarified that the proviso after sub clause (iii) of Section 17(5)(b) is applicable to all the sub clauses under clause (b) of Section 17(5). 7.23.2 ....................... 7.23.3 ...................... (x) That Clause (b) of Section 17(5) of the CGST Act, 2017 restricts ITC on outdoor catering. It is therefore clear from the Circular that although Section 17(5)(b) restricts ITC on outdoor catering, ITC would still be available if it is obligatory for the Appellant to provide the canteen services to its employees under any law for the time being in force; (y) That in view of the aforesaid, the second proviso is applicable to the entire Section 17(5)(b) of the CGST Act In the instant case, it is obligatory for the Appellant to have canteen in its factory in terms of Section 46 of the Factories Act due to more than 250 workers. Therefore, the Appellant has e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide question (1) (para 4 above refers) they are asking whether deduction of amount by the Appellant from the salary of employees is supply or not and consequently such deductions is leviable to GST or not? The similar question is asked with respect to the recover} made from the manpower supplier in the case of contractual workers. We observe that the collection of money is never supply and, therefore, can never be leviable to GST. This is clearly borne out of Section 2(52) of the CGST Act, 2017 which while defining goods excludes money from its purview. Similarly, definition of services is defined in Section 2(102) of the CGST Act, 2017 excludes money from its purview. Clearly, deduction of amount from the salary or recovery of some amount from manpower supplier (in case of contractual worker) will be a transaction in money, accordingly, it is not the transaction relating to supply of goods and services, and hence, not liable to GST. 8.1 It seems that the Appellant wanted to raise the question, as to whether, supply of food on subsidised rate to its employees/contractual workers, is liable to payment of GST or otherwise? We would answer this query in subsequent paras. Further, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid to the canteen service provider for the period January, 2023 to June, 2023 totals to about Rs. 47.70 lakhs. Against this payment it is claimed that the Appellant has recovered Rs. 1.58 lakhs from the employees and Rs. 0.95 lakh from manpower supplier, who is supplying them contract workers. Therefore, consideration is present in the transaction. 9.1 Coming to legal position, it is seen that the consideration is defined in Section 2(31) is as under: (31) 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; (b) the monetary value of any act or forbearance, 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: Provided that a deposit given in respect of the supply of goods or service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cepting his contention; GST is leviable for supply of food. 9.5 Further, we find that the Appellant has also contended that supply of subsidised food should be seen a part of pay package negotiated with the workers. We would discuss this plea in later paras. 10. We also observe that the Appellant has argued that he is in the business of manufacture and supply of automotive components and supply of food is not his business, rather, it is their obligation under the provisions of the Factories Act, 1948. The Appellant has quoted few case laws, which elaborate the meaning of expression Furtherance of Business . However, since the CGST Act itself defines the expression business under section 2(17) of the CGST Act, 2017, therefore, there is no need to look any further to gather the meaning of term business as considered in different cases/ provisions of law. The definition of business as given in Section 2(17) of the ( GST Act, 2017 is as under:- (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome other parties holding that GST is not leviable on the amount collected from the employees towards canteen charges. Though, there is no denying that these rulings have some persuasive value, however, these rulings are not binding on this Authority and this Authority differs from the rulings pronouncement by the AAR/AAAR in similar cases favouring the Appellant. It is also a fact that some of AAR/ AAAR rulings have also held that GST is leviable on subsidised food supplied by the taxpayers to their workers. The Appellant has ignored these rulings for the obvious reason. Since, we have a different appreciation of law and, therefore, we are not persuaded to adopt the view that supply of subsidised food to the employees/contractual workers is not leviable to GST. 11. The next line of argument which has been adopted by the Appellant is supply of food at subsidised rate is not liable to GST in terms of Circular No. 172/04/2022-GST dated 06.07.2022 of CBIC, the relevant extract of the said circular is reproduced hereunder for case of reference: S.No. Issue Clarification 5 Whether various perquisites provided by the employer to its employees in terms of contractual agreement entered int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an implied contract between the Appellant and the employees, and the employees are aware that they would be getting the food at subsidised rate. Since under the law, employees have right to receive benefit, therefore absence of this clause in the employment agreement cannot be the basis for denial of benefit of above circular in his case. 11.3 We are of the opinion that Employment Agreement lists out the compensation which is agreed to be granted by the employer to the employees towards their services. If any perk is mentioned in the employment contract, then it becomes binding for the employer to provide the same to the employees, otherwise such an employer can be sued in the court of law for the breach of condition of employment contract. Therefore, anything provided beyond the employment contract, is a part of sweet will or largesse on the part of employer and cannot be insisted upon by an employee. Viewed from this angle, a perk, which is not specified in the employee contract, is not in lieu of services, supplied by the employer to the employee but the largesse or matter of good will on part of such employer. Therefore, absence of mention about supply of subsidised food, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvisages as under:- 68. Prices to be charged- (1) Food, drink and other items served in the canteen shall be sold on a non-profit basis and the prices charged shall be subject to the approval of the Canteen Managing Committee. (2) The charge per portion of food stuff, beverages and any other item served in the canteen shall be conspicuously displayed in the canteen. (3) Where the canteens are managed by a co-operative society of the workers, a nominal profit not exceeding 5% may be charged by such society. 11.7 We find that although the above quoted Rule 68 of the Himachal Pradesh Factories Rules, 1950 does provide that food is to be provided at no profit basis, but it is clear that though supply of food is mandatory but the Factories Act or the Rules do not mandate supply of food at subsidised rate or food without taxes. Therefore, the supply of food even at subsidised cost, is a supply within the meaning of Section 7 of the CGST Act, 2017 [value of such supplies to be determined under Section 15 of the CGST Act, 2017 read with provisions of Chapter IV of the CGST Rules, 2017] and do not qualify as perk as considered in terms above Circular dated 06.07.2022 ibid. 11.8 The Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocked credit under Section 17(5)(b), inter-alia on food and beverages, do not apply only where, it is obligatory for an employer to provide goods and services or both to the employee under any law for the time being in force. Since, the proviso carves out an exception to the Rules/ Provisions, a strict interpretation is required to be adopted for examining its applicability. Since the contract workers are not employees of the Appellant, therefore, the benefit of the above proviso will not be applicable in respect of contract workers but will be limited only with respect to the employees. 12.3 We observe that the above Section 17(5) (b) was amended on 01.02.2019. The same was resultant of the 28th meeting of the GST Council held on 21 st July, 2018. The Press Note issued on the recommendations made during above meeting stated that the scope of input tax credit is being widened and it would now be available in respect of goods or services which are obligatory for an employer to provide to its employees under any law for the time being in force. Ilie Appellant submitted that they arc a manufacturing unit and that there arc 380 workers/employees in the factory (at the time of filing, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e obligatory for an employer to provide to its employees, under any law for the time being in force. 3. Accordingly, it is clarified that the proviso after sub-clause (iii) of clause (b) of sub-section (5) of section 17 of the CGST Act is applicable to the whole of clause (b) of sub-section (5) of section 17 of the CGS T Act. 12.5 In view of above legal position clarified by CBIC, as second proviso to Section 17(5)(b) inserted vide CGST Amendment Act, 2018, effective from 1.2.2019, is applicable to the whole of clause (b) of sub-section (5) of Section 17 of the CGST Act, 2017, therefore, we find that Input Tax Credit will be available to the Appellant in respect of food beverages as canteen facility, is obligatorily to be provided under the Factories Act, 1948, to its employees working in the factory . Input Tax Credit will be available in respect of such services provided by canteen facility to its direct employees but not in respect of other type of workers including contract employees/Workers, visitors etc. 12.6 The issue which is flowing out of para 12.5 above is, whether ITC available on GST charged by the canteen service provider, on canteen facility provided to its employees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts 5% of GST in terms of entry no. 7 (ii) of the Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 which was amended by the Notification No. 20/2019-C.T. (Rate) dated 30.09.2019, effective from 01.10.2019. 12.10 From the facts of the case, it is clear that Canteen Contractor is providing Restaurant Service to the Appellant which is chargeable to GST @5% rate in terms of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017, as amended, without availment of ITC. Under explanation to the aforesaid entry, it has been clarified that the concessional rate is mandatory rate and availing the normal rate of tax will not apply and that is the reason the amended Notification No. 20/2019-C.T. (Rate) dated 30.09.2019 has been issued exercising power under Section 16(1) and Section 148 of the CGST Act, 2017, so as to come out of the provisions of permitting availment of ITC. In other words, a Taxpayer providing Restaurant Service has no option of taking ITC and providing Restaurant Service at normal rate. 12.11 Accordingly, the canteen service provider is providing the service to the workers of the Appellant on behalf the said Appellant and paying Tax at specified rate of 5% ..... X X X X Extracts X X X X X X X X Extracts X X X X
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