TMI Blog2022 (10) TMI 949X X X X Extracts X X X X X X X X Extracts X X X X ..... e employment contract is not a consideration for any supply or services. Similarly, the action of surety bond forfeiture by the applicant (which is furnished by the contractual employee at the time of joining) of the employees who leave the company without serving minimum contract period as per the employment contract is also not a consideration per se. These amounts are covered under Schedule HIM and not clause 5(e) of schedule II appended with the CGST Act, 2017. So, it is outside the scope of supply because the said amount recovered by the applicant is in lieu of un-served notice period/non serving the contract period by the employees. It cannot be regarded as a consideration which has been defined in the section 2(31) of the Act - both are excluded from the definition of Supply under the GST Act. Provision of the canteen facility at its premises by the applicant company for its employees - HELD THAT:- The facility of canteen is being provided by the companies to its employees under the Factory Act, 1948 wherein it is mandatory to the applicant to make provisions of the canteen facility to its employees. There is no independent contract between the applicant and the employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e post or wires, trees, grass or grassland. etc, the same may be adjusted and the balance shall be refunded back to the contractor - Bank Guarantee is also forfeited for the same reasons as Security Deposit is forfeited - thus not taxable. Taxability - amount written off in the books of account of the applicant as creditors balance - HELD THAT:- The authority is of view that there are no services received or provided by the applicant company in this situations/transactions. So, this transaction of writing off unclaimed amount of the contractors/other creditors is basically an income and not a supply, hence outside the purview of scope of supply under the GST Act - not taxable. - HR/ARL/19/2022-23 - - - Dated:- 18-10-2022 - SUNDER LAL AND KUMUD SINGH, MEMBER APPLICANT'S ELIGIBILITY FOR SEEKING AN ADVANCE RULING: To file an application before the Authority of Advance Ruling, the applicant must satisfy the conditions prescribed under the Central Goods and Services Tax Act, 2017 (hereinafter referred to as CGST Act, 2017) and Haryana Goods and Services Tax Act, 2017 (hereinafter referred to as HGST Act, 2017). Since the provisions of both the Acts are pari mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of employees (other than contractual employees) (i.e., Terms Conditions for Appointment in RITES) states that if the employee of the company resigns from the organization, then such employee has to mandatorily serve the minimum notice period as mentioned in the said agreement. However, in case if the employee is unable to serve the stipulated notice period, then in such cases, the Applicant company recovers an amount as Notice Pay or deducts the said amount from the salary of the employee in lieu of the notice period which has remained un-served by the said outgoing employee. It is in the nature of a compensation for the breach of the terms of the Employment Agreement. The clause of the Agreement is as following:- You will be required to give one month notice period if you wish to resign from service during probation. However, on completion of probation period, you will be required to give notice of three months. Therefore, in case any employee wishes to leave the company resigns, he needs to serve a notice period of 1 month if he resigns during probation period, and, if such employee resigns from the company after completion of probation period, he/she needs to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereon (which are subject to revision from time to time as agreed between the Applicant company and M/s Gemini Associates) from the Applicant company on per meal basis, i.e., per meal consumed by Applicant's employees. The Applicant company recovers a nominal amount/subsidized amount from its employees for the meals consumed by them. However, in order to pay such amount to the 3rd party canteen service provider, the company deducts a nominal subsidized amount of Rs. 650/- (from the highest rank employee) on monthly basis from the salary of employee of the company (which shall be roughly equivalent to maximum Rs. 29.55 per meal, assuming 22 working days/meals in amon and bears the remaining cost incurred for providing such facility from its own pocket. Office Order dated 20 June 2017 issued in respect of lunch facility arranged for em lo ees of the company is tabulated verbatim as under:-. . Category of employees Class of city amount to be deducted per month X-Class X- Class Y- Class Z-Class Existing Revised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facility of Applicant company. The expense of printing the identity card is transferred by the Applicant to general expenses, i.e., printing expenses. E. Liquidated Damages due to delay in completion: The Applicant, due to the expertise possessed by it, enters into contract or is awarded work by various organizations who wish to get certain infrastructure developed, for instance, Applicant is entrusted with work of Construction of additional Class Rooms, Toilet Block, Library, Computer Center for Govt. Polytechnic College at Siddapura and ES Limit Construction of additional Class Rooms, Labs, boys and girls common room, exam control room, officers and first aid room for Govt Polytechnic College at Mundgod in Uttara Kannada District in Karnataka for Dept. of Collegiate and Technical Education, Gove of Karnataka. For getting such infrastructure developed, Applicant hires certain contractors who performs the construction activity and Applicant supervises the same as per the technical expertise possessed by it. The Applicant, being a Government of India enterprise, floats tenders invites bids for various types of works/activities for which the Applicant wish to find a vend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther the amount collected by the Applicant company as Notice Pay Recovery from the outgoing employee would be taxable under GST law and if yes, rate of GST thereupon? 2. Whether the amount of Surety Bond forfeited/encashed by the Applicant company from the outgoing contractual employee would be taxable under GST law and if yes, rate of GST thereupon? 3. Whether GST would be payable on nominal subsidized recoveries made by the Applicant from its employees towards provision of canteen facility by 3 rd party service provider to Applicant's employees and if yes, rate of GST thereupon? 4. Whether the amount collected by the Applicant company from its employees in lieu of providing a new identity card (ID Card) would be chargeable to GST and if yes, rate of GST thereupon? 5. Whether the amount collected by the Applicant as liquidated damages for non performance/short-performance/delay in performance is taxable under GST and if yes, rate of GST thereon? 6. Whether the amount forfeited by the Applicant company pertaining to Earnes Money, Security Deposit Bank Guarantee due to the reasons mentioned sapra would be chargeable to GST and if yes, rate of GST thereon? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted for arranging the canteen facility for the employees of the Applicant company The applicant company enters into a contract with the 3rd party service vendor to provide food facility directly to the employees of the company for which the invoice is raised by the 3rd party service vendor upon the Applicant. The Applicant company charges a nominal amount from its employees and bears the remaining portion from its own pocket. The Applicant is of the view that the amount received by him in respect of arranging the food facility for the employees is not chargeable to tax due to the following reasons as under:- i. The services are provided by the 3rd party to the employees of the company and not by the Applicant. It is further pertinent to mention that the invoice has been issued upon the Applicant and the services have been availed by the employees, therefore, in no case it can be said that the services has been provided by the Applicant to the employees of the company. ii. Furthermore, GST has already been charged by the 3rd party service provider for the food facility provided to the employees of the Applicant and the Applicant merely charging nominal amount employees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Situation 1. If after bid opening, but before expiry of bid validity or issue of Letter of acceptance, whichever is earlier, any tenderer i. Withdraws his tender, or ii. Makes any modification to the terms and conditions of tender which are not acceptable to the employer 2. In case any information/document which may result in the tenderer's disqualification is concealed by the Tenderer or any statement/information/document furnished by the Tenderer or issued by a Bank/Agency/Third Party and submitted by the tenderer, is subsequently found to be false or fraudulent or repudiated by the said Bank/Agency/Third Party. 3. In the case of a successful Tenderer, if the Tenderer fails to furnish the performance Guarantee within the period specified under Clause I of Clauses of Contract or fails to commence the work without valid reasons within the period as specified in Contract Data after the date of issue of Letter of Acceptance or from the first date of handing over of the site, whichever is later. The App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 2021. Para 2.9.3. of Taxation of Services: An Education Guide released by CBIC itself dated 20 June 2012. M/S XL Healthcare Corporation India Private Limited v. Commissioner of Central Tax, Bengaluru South Commissionerate [Bangalore CESTAT Final Order No. 20225-20226/2022]; Rajasthan Rajya Vidhyut Prasaran Nigam' Ltd. v. Commissioner of Central Goods and Services Tax, Customs and Central Excise, Jodhpur [reported in [2022] 135 taxmann.com 6] M/s GE T D India Limited v. Deputy Commissioner of Central Excise LTU, Chennai [reported in 2020 (1) TMI 1096); M/s Uniparts India Limited v. Commissioner (Appeals), Central Excise, Meerut [reported in 2019 (7) TMI 1897]; M/s HCL Learning Limited Vs Commissioner of Central Goods Services Tax, Noida [reported in 2019 (12) TMI 558]; South Eastern Coalfields Ltd. v. Commr. of C. Ex. S.T., Raipur, cited in 2021 (55) G.S.T.L. 549 (Tri. - Del.); M/s Neyveli Lignite Corporation Limited - Chennai Tribunal cited in 2021 (53) G.S.T.L. 401 (Tri-Chennai); M/s M.P. Poorva Kshetra Vidyut Vitran Co. Ltd. v. Principal Commissioner CGST CE - CESTAT New Delhi reported in [2021] 126 taxmann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in lieu of un-served notice period/non serving the contract period by the employees. It cannot be regarded as a consideration which has been defined in the section 2(31) of the Act. Further, the transaction with reference to the Notice Pay recovered/surety bond forfeiture are also not covered under the definition of business 2(17) under the CGST Act, 2017. Notice pay does not result into the provision of service by either party, it is sort of compensation either to employee or employer and not a consideration. It is a safety valve sort of option to both the parties i.e. if one of the party frustrate the employment contract either by reneging or by failing to perform. It is the employee who is the service provider and service supplied by him in the course of its employment is excluded from the definition of Supply under the GST Act. 2. Provision of the canteen facility at its premises by the applicant company for its employees:- The applicant has apprised the authority that it has arranged/provided the canteen facility for its employees which is being run by the third party service vendor. The employee enjoys the facility of canteen directly. In this mode of supply the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n non serviceable condition. In this matter, the authority is of view that this transaction does not fall under the taxable event under the GST as it's covered under the schedule III(1) appended with the CGST Act, 2017. 4. Taxability on the transaction of liquidated damage charged due to delay in completion of work and forfeiture of Earnest Money/ Bank Guarantee /Security Deposit:- Factual as well as legal detail of the transactions of the matter is examined by us along with the details of the copy of Tender flouted/issued by the applicant company for the works. The authority is of view that the matter stands clarified in the circular dated 03.08.2022 of the Board. It's decided accordingly. 5. Taxability of amount written off in the books of account of the applicant as creditors balance:- The applicant has stated that the any amount of the contractor which was deposited as security before the execution of the contract is not reclaimed by the contractor and similarly certain other creditor's balance which remains unclaimed for a certain period of time and such creditor do not come forward to claim the amount. In these cases, the said amount is written off ..... 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