TMI Blog2021 (12) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... tional services from the third party and instead of this the contractor is providing/supplying the single service of manpower supply and the contractor is charging for the said service only. Further, there is no contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of services as the Work Order dated 22.02.2017 simply provides that after deposit of EPF and ESI in the concerned department, the reimbursement will be done as per rule and there is no mention in the said Work Order that the contractor will deposit EPF and ESI as the pure agent of the applicant. GST is liable to be paid @18% on the reimbursement of EPF and ESI contribution as the same is liable to be included in the value of supply as per Section 15 of the CGST Act, 2017. - UP ADRG 76/2021 - - - Dated:- 16-4-2021 - SHRI ABHISHEK CHAUHAN AND SHRI DINESH KUMAR VERMA, MEMBER Represented by : Shri T.K. Srivastava (Advocate) ORDER UNDER SECTION 98(4) OF THE CGST ACT, 2017 UNDER SECTION 98 (4) OF THE UPGST ACT, 2017 1. M/s Lucknow Producers Cooperative Milk Union Ltd., 22, Jopling Road, Lucknow-226001 (here in after referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant and simply informed the tax rate on milk products supplied by the applicant. The Dy. Commissioner, CGST CX Division-1-, Lucknow vide/TECH./Misc(23/10/1 9)/2019/Pt-I dated 07.04.2021 has opined that the GST shall be charged by Manpower Recruitment Agency (the supplier) to the applicant on the gross value which includes EPF, ESI contribution, service charge and actual reimbursement to the person/labor (manpower). 6. The applicant was granted a personal hearing on 15.04.2021 which was attended by Shri T.K. Srivastava, Advocate during which he reiterated the submissions made in the application of advance ruling. DISCUSSION AND FINDING 7. At the outset, we would like to make it clear that the provisions of both the CGST Act and the UPGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the UPGST Act. Further for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / UPGST Act would be mentioned as being under the CGST Act'. 8. We have gone through the Form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. It also includes 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. However, as can be seen from the above, consideration would include the entire payment received by the contractor (manpower supplier) from the applicant and GST would be payable on the entire amount collected by them from the applicant which includes the salary amount/wages to be paid to the labours as well as the reimbursement of EPF and ESI contribution. 13. We would also like to refer to Section 15 of the CGST Act, 2017, which pertains to Valuation of taxable supply and reads, as under: Relevant portion of Section 15 of the CGST Act: 15. Value of taxable supply (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, sub-section(2) of Section 15 elaborates in detail, the items that are required to be included in the value of supply, whereas sub-section (3) of Section 15 specifically elaborates the items that are not to be included in the value of supply. 15. As per Section 15 of the CGST Act, 2017, there is intent to include even all taxes, duties, cesses, fees and all charges in the value of supply and there can be no exception for ESI and EPF amount. Therefore, taking into the view the definition of 'consideration' and the aspect of 'valuation of supply' as discussed above, it is apparent that the GST is chargeable on the entire amount received by contractor from the applicant. 16. Now as per the applicant's submission regarding pure agent, we find that Rule 33 of CGST Rules, 2017 states that- Notwithstanding anything contained in the provisions of this Chapter, the expenditure or costs incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following conditions are satisfied, namely, - (i) the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices as the Work Order dated 22.02.2017 simply provides that after deposit of EPF and ESI in the concerned department, the reimbursement will be done as per rule and there is no mention in the said Work Order that the contractor will deposit EPF and ESI as the pure agent of the applicant. Moreover, having gone through the challan/ Payment Confirmation Receipt of EPF Organization and E-challan Payment Receipt of Employees State Insurance Corporation, it is evident that the contractor of the applicant does not fulfil the conditions of pure agent of the recipient of service (i.e. the applicant). 18. Accordingly, we hold that GST is liable to be paid @18% (9% CGST and 9% SGST) on the reimbursement of EPF and ESI contribution as the same is liable to be included in the value of supply as per Section 15 of the CGST Act, 2017. 19. In view of the above discussions, we, both the members unanimously rule as under; RULING 20. Que 1. GST liability on reimbursement of Employee Provided Fund ESI? Answer - GST is liable to be paid @18% (9% COST and 9% SGST) on the reimbursement of EPF and ESI contribution as the same is liable to be included in the value of supply as per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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