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TMI Blog2024 (6) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of business. 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 primary role is that he provided 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. 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. Thus, the deduction of nominal amount made by the applicant from the salary of the employees who are availing the facility of food provided in the factory premises would not be considered as a supply under the provisions of section 7 of the CGST Act, 2017. Whether GST is applicable on the nominal amount to be deducted from the salaries of employees? - HELD THAT:- Since the answer to the above is not in the affirmative, the ruling sought in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and chairs, cooking facility with utensils, refrigeration, storage rooms for keeping the cooked food, washrooms and wash basin, etc.. 5. The applicant has further contended as follows: No GST on canteen facility that the detail of food consumed details of employee is maintained by the applicant; that based on the record of food consumed, the CSP raises an invoice; that after termination of employment services, the employee is not allowed access to canteen facilities; that deduction of the nominal amount from employees would become taxable under GST only if such amount qualities as consideration towards supply as defined u/s 7 of the CGST Act, 2017; that in terms of Schedule-Ill, services by an employee to employer in the course of or in relation to his employment, is not treated as a supply of goods/services; that any consideration by the employer to the employee on account of the activities undertaken under the contract of employment is out of the scope of GST; that an activity undertaken in the course of an employment relationship would be outside the scope of GST; that in terms of circular no. 172/04/2022-GST dated 6.7.22, it is clarified that any perquisite provided to emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.7.20] [b] Bal Mumbai Trust [Commercial suit (I) MP/ 236/2017] [c] TATA Motors Ltd [Guj/GAAR/R/39/2021 dtd 30.7.2021] [d] TATA Motors Ltd [GST-ARA-23/2019-20/B-46] [e] Posco India Pune Processing Centre P Ltd [GST-ARA 36/18-19/B-1 10] [f] Jotun India P Ltd [2019 (10) TMI 482] [g] Cinemax India Ltd [SCA 8032/2011] [h] Raipur Manufacturing Co [CA 603/1965]; [i] IIT [WP 1768/1973] [j] Encure Pharmaceuticals Ltd [GST-ARA-119/2019-20/B-03 dtd 4.1.2022] [k] SRF Ltd [GUJ/GAAR/R/41/2022 dtd 28.9.22] [l] Cadila Pharmaceuticals Ltd [GUJ/GAAR/R/2023/14 dtd 31.3.2023] [m] TATA Autocomp Systems Ltd [GUJ/GAAR/R/2023/23] 6. The applicant has filed this application for advance ruling to ascertain the GST implication in respect of canteen facility being provided to employees. Vide the aforesaid application, the applicant has raised the following question for advance ruling viz (i) Whether the deduction of a nominal amount made by the applicant from the salary of the employees who are availing the facility of food provided in the factory premises would be considered as a supply of service by the applicant under the provisions of section 7 of CGST Act. 2017 and GGST Act, 2017? (ii) In case answer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or furtherance of business; [(aa) the activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration. Explanation .- For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities 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; [and] (c) the activities specified in Schedule I, made or agreed to be made without a consideration; [***] (d) [****]. [(1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyer and the employee, will not be subjected to GST. Further, the input tax credit (ITC) scheme under GST does not allow ITC of membership of a club, health and fitness centre section 17 (5) (b) (ii)]. It follows, therefore, that if such services are provided free of charge to all the employees by the employer then the same will not be subjected to GST, provided appropriate GST was paid when procured by the employer. The same would 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 sub-section (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 sub-section (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-section (5) of section 17 of the CGST Act provides as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility of food provided in the factory would be considered as a supply of services by the applicant under the provisions of section 7 of the CGST Act, 2017. Now, in terms of Section 7 of the CGST Act, 2017, supply means all forms of supply of goods/services or both such as sale, transfer barter, exchange, licence, rental, lease, or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. 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 more than 500 employees who have been provided with canteen facility in terms of section 46 of the Factories Act, 1948. The applicant s primary role is that he provided 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. 14. 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the facility of food provided in the factory premises would not be considered as a supply under the provisions of section 7 of the CGST Act, 2017. 15. Since the answer to the above is not in the affirmative, the ruling sought in respect of the second question is rendered infructuous. Input Tax Credit 16. The next question on which the applicant has sought ruling is whether Input Tax Credit of GST charged by the CSP would be eligible for availment to the extent of cost borne by the applicant. However, in the additional submissions the applicant has stated that they recover only a partial basic cost of the canteen charges the GST on the entire canteen bill is borne by the applicant; that the amount recovered from the employee contains the component of basic cost excluding GST no additional cost is recovered from the employees; that they should be allowed to avail the entire ITC on the GST charged by the CSP. In this connection, before proceeding further, certain factual aspects which we would like to mention, though at the cost of repetition are viz that they employ more than 500 employees at their factory; that section 17 (5) (b) ibid, was amended on 1.2.2019, and is reproduced s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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