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2023 (6) TMI 1297 - AAR - GSTScope of Supply - providing food to the employees at subsidized price as per terms and conditions of the employment contract - subsidized deduction made from the salary of employees who are availing facility of food in the factory - consideration of supply of service or not - aplicability of GST on the amount deducted from the salaries of employees - input tax credit on the GST charged by third party contractor for canteen services availed by it for its employees. HELD THAT:- M/s Shriram Pistons and Rings Limited has arranged a canteen facility for its employees, which is run by a Canteen Contractor M/s P.J. Banan. As per their arrangement, part of the Canteen charges is borne by M/s Shriram Pistons and Rings Limited whereas the remaining part is borne by its employees. The said employees’ portion of canteen charges is collected by M/s Shriram Pistons and Rings Limited and paid to the Canteen Service provider. M/s Shriram Pistons and Rings Limited submitted that it does not retain with itself any profit margin in this activity of collecting employees’ portion of canteen charges. M/s Shriram Pistons and Rings Limited vide letter dated 15-11-2022 has submitted that more than 2000 employees are working in its factory. The applicant is not liable to pay GST on the amount deducted/ recovered from the employees. Further the applicant is recipient of canteen service to facilitate the employees and Canteen Service Provider raises the Bill of canteen charges inclusive of GST as per the contract. The applicant collects/ recoveres the partial amount from the employees and is required to pay the gross amount inclusive of GST to the canteen service by adding residual amount in the employees’ portion and is required to pay gross amount of Bill inclusive of GST to the Canteen Service Provider. ITC on canteen charges on the food supplied to employees of the applicant company - HELD THAT:- The proviso of Section 17 (5)(b) stipulates that ITC shall be available on the GST paid where it is obligatory to provide a benefit for an employer to its employees in terms of any law for the time being in force - in view of the above clarification ITC of the GST paid on canteen charges is available to the applicant on the food supplied to the employees of the applicant company as under Section 46 of the Factories Act, it is mandatory to provide canteen facility to the employees.
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