Home Case Index All Cases GST GST + AAR GST - 2022 (9) TMI AAR This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (9) TMI 200 - AAR - GSTLevy of GST - canteen services / catering services - amount recovered by the company, from employees or contractual workers - provision of third-party canteen service is obligatory under section 46 of the Factories Act, 1948 - input tax credit of GST paid on food bill of the Canteen Service Provider - HELD THAT:- These activities provided by M/s Troikaa to its employees to be an activity made in the course or furtherance of business to deem it a Supply by M/s Troikaa to its employees in view of the above clarification and therefore amount collected by M/s Troikaa from employees towards canteen charges in terms of the contractual agreement in lieu of providing canteen service i.e. food is not liable to GST. A person is deemed to have been employed as contract labour when he is hired in, or in connection with a particular work of the principal employer. Where a person is 'hired' specifically for the work of an establishment, his scope of work does not extend beyond the work of that establishment and he is considered to be a contract labour - The term 'employed' is not defined under the GST, therefore, we refer to the dictionary meaning. The Law Lexicon says that the word 'employed' means engaged or occupied in the performance of work or hired to perform labour. Security Firm/ Contractor pays the salary to the contractual worker i.e. Security personal. Theses contractual worker are supplied by the contractor to M/s Troika for carrying out activity in the premises. M/s Troika has paid gross amount for the moth to the labour contractor for supply of labours at factory premises. The gross amount includes allowances, leave encashment and Provident Fund. This shows that M/s Troika paid gross amount to the labour contractor and labour contractor being employer paid the wages per month to the workers being employees and also deduct Provident Fund - therefore, it is evident that the instant case does not pass the test of employer-employee relationship and is therefore does not fall under the ambit of entry I of Schedule III of CGST Act. In the case at hand, the applicant has established canteen facilities as mandated under Section 46 of the Factories Act, 1948 and supplies food at a subsidized cost through third-party-vendor. The supply of food by the applicant is 'Supply of Service' by the applicant to their contractual worker/s. The cost, which is recovered from the salary of contractual worker, as deferred payment is 'consideration' for the supply and GST is liable to be paid - the recovery of amount from contractual worker on account of third party canteen services provided by M/s Troika would come under the definition of 'outward supply' as defined in Section 2(83) of the CGST Act, 2017 and therefore, liable to tax as a supply under GST. 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 - 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 such under Section 46 of the Factories Act, it is mandatory to provide canteen facility to the employees. ITC on canteen charges on the food supplied to contractual worker - HELD THAT:- In the instant case the applicant company and contractual worker do not cover under the category of employer-employee relationship and also it is not obligatory on the applicant company to provide canteen facility to the Contractual worker as per the provisions of CLRA Act. Section 17 (5) allows ITC on food, beverages and outdoor catering only in case it is obligatory under any law for the time being in force. Thus applicant is not eligible of ITC on the food supplied by canteen service provider to contractual worker and is blocked under Section 17(5) (b) of CGST Act 2017 - the applicant company is not eligible to the ITC on food supplied to the contractual worker under Section 17 (5) (b) of CGST Act 2017.
|