TMI Blog2023 (6) TMI 1147X X X X Extracts X X X X X X X X Extracts X X X X ..... npower has completed task assigned by RSM on a timely manner - Manpower shall exclusively be engaged by applicant; under no circumstances shall the relationship of employer and employee deem to arise between RSM and Manpower. Manpower arrangements made by applicant shall strictly be under the supervision of applicant. The applicant shall make payment to ESI, PF and other relevant authorities. RSM shall pay applicant certain expenses which includes Security Deposit, Rent, Food cost, Maintenance and Security charges, etc, with effect from 01.10.2020 to 30.09.2022. If the Factory is not in operation or operating with the very lean work force, the service charges shall be reduced proportionately by RSM. If RSM is not in a position to utilize the services of applicant due to force majeure condition including epidemic diseases or due to reasons attributed to applicant, RSM shall have no obligation to pay for the services ordered but not utilized and also if the RSM is of the opinion that the possibility of the usage of the services of applicant is difficult to determine, RSM has the option to terminate this agreement at a shorter written notice of seven days. From the invoices give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicant who had sought it in respect of any matter referred to in sub-section (2) of section 97 for advance ruling; (b) on the concerned officer or the jurisdictional officer in respect of the applicant. 3. In terms of Section 103(2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed. 4. In terms of Section 104 of the Act, where the Authority finds that advance ruling pronounced by it under sub-section (4) of Section 98 or under sub-section (1) of section 101 has been obtained by the applicant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the applicant as if such ruling had never been made. 5. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2 Food vendor will be supplying food at 5% GST, hostels are taken on rent its landlord will be charging 18% GST on rent, security service provider (Private Limited Co.) will be charging 18% GST and Housekeeping service provider will be charging 18% GST. Hence, they bill the client for food supplies at 5% GST, hostel rent, security services and housekeeping - each at 18%. TNEB s Electricity charges for the rented premises and diesel expenses (incurred when power generators are run) will be reimbursed at actual as outlined in the contract clause. There is no separate rent on using the diesel generator as the same is provided without separate charge by landlord. 2.1.3 Hostel facility is common for all workers and being used by workers sourced from other staffing agencies as well. Hence, their role will be a mere contractor facilitating the services on the request of client and have to pass on the bills to client separately for each of the service on actual basis. They will bill the client a separate service charge with 18% GST for the facilitation work. 2.1.4 Input credit is not availed by their client on consuming any of those services. 2.2.1 As per statement of facts, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recipient of supply, for making outward supply of the same services, they are of the opinion that the output tax on their bill is rightly charged at 5%. 2.3.2 Input tax credit on food supplies: As per section 17(5)(b)(i) input tax credit is not blocked where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply. Hence, they reiterate that they get inward supply of food for making outward taxable supply of the same food. In addition, section 15(2) states that taxes levied under CGST/ SGST shall not be value of supply if charged separately by the supplier - i.e., no tax on tax - this when read with section 17(5)(b)(i) makes it clear that they can avail input on food supply received for making outward supply of the same food. 2.3.3 Electricity charges of hostel taken on rent : As TNEB does not levy tax in line with section 7(2)(b) of CGST Act, 2017 on electricity and contractually they are acting as Pure agent to receive electricity charges as reimbursement of actuals, they are not cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Private Limited and M/s Good Hands Management Services. Renewal Cum Amendment Agreement of Manpower Supply (Dorm-16-ACT Campus-Good Hands-TN) dated 15.09.2020 between M/s Rising Stars Mobile India Private Limited and M/s Good Hands Management Services. Food Service Agreement (Dorm No.14-Sakthi Mariamman College Dorm-TN) dated 15.07.2020 between M/s Good Hands Management Services and M/s A-Diet Express Hospitality Service Limited. Lease Agreement (Dorm 16-ACT Campus-TN) dated 15.09.2020 between M/s A.C.T. Educational Charitable Trust and M/s Good Hands Management Services. Security Services Agreement (Walsons-TN) dated 19.12.2020 between M/s Good Hands Management Services and M/s Walsons Services Private Limited. Housekeeping Maintenance Services Agreement (Dorm No. 16-ACT Dorm-Nelvoy) dated 16.09.2020 between M/s Good Hands Management Services and M/s Star Delight Facility Services. Invoice No. 402 dated 04.05.2021 for Rs. 959381/- (including GST@ 5%) issued by M/s Good Hands Management Services to M/s Rising Stars Mobile India Private Limited towards reimbursement of food expenses enclosing Invoice No. FB/21-22/04/010 dated 29.04.2021 for Rs. 959 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... electrical and maintenance manpower, repairs maintenance, recreation equipment cost, sewerage clearance and disposal, feminine charges, housekeeping materials, EB charges, drinking water and service charges @ 10% and GST @ 18% on supply value except electricity charges Rs. 110500/-. Invoice No. 426 dated 25.05.2021 for Rs. 9268727/- (including GST @ 18%) issued by M/s Good Hands Management Services to M/s Rising Stars Mobile India Private Limited towards total compensation payable on gross pay for the month of May 2021 contract employees, employer PF contribution, ESI contribution and Service charges. Written submission on interpretation as to how various supplies based on an agreement are neither mixed supply nor composite supply. 3.3 Sri M.Saravanan, Partner of the applicant Firm and AR Sri S. Sankara Subramaniam appeared for the virtual hearing on 20.07.2022. The AR was asked whether there is separate agreement for hostel services, he replied that Master Agreement is entered into for Manpower supply and Renewal cum Amendment Agreement includes rent, maintenance, security and food charges. He stated that no separate agreement for providing hostel services with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings are pending in respect of the applicant. The said authority has stated that no proceedings in the applicant s case on the issues raised by the applicant are pending and the following comments on the issues raised were received. 4.2 The taxpayer is not supposed to charge 5% GST but only 18% GST on the food supply in terms of Notification No. 11/2017-CT(Rate) dated 28.06.2017 SI. No. 7(a)(ix) as the tax payer is providing only manpower service and not catering/restaurant service falling under SI. No. (i) to (viii) thereof. 4.3 The taxpayer can take 5% ITC as per first proviso to section 17(5)(b)(i) of CGST Act. 2017 and also there is no condition specified under SI. No. 7(ix) of Notification No. 11/2017 CT (Rate) dated 28.06.2017 for not taking ITC. 4.4 With regard to electricity charges of hostel premises taken on rent and diesel charges for backup gensets at hostel premises, no comments were offered as they are not within the purview of GST taxation. 4.5 The first proviso to section 17(5)(b)(i) of CGST Act, 2017, stipulates that ITC is available on rent, security and housekeeping services, wherein an inward supply is used for making an outward taxable suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2 From the submissions before us, we find that the question which needs answer is covered under Section 97(2) (e) (f) of the GST Act 2017 as mentioned in SI. No. 13 of AAR application in Form GST ARA-01 and therefore admissible before this authority for consideration and pronouncement of ruling. 8. The applicant has submitted various documents including agreements in relation to various supplies on own account and supplies of third parties procured at the instance of service recipient. The perusal of the said documents are essential to ascertain the rights and obligations of the applicant in relation to the scope of outward supply and the use of inward supplies in relation to outward supplies or otherwise. 8.1.1 Manpower Supply Agreement dated 14.07.2017 between the applicant and M/s Rising Stars Mobile Private Limited (RSM) states that every Manpower shall exclusively be engaged by applicant; under no circumstances shall the relationship of employer and employee deem to arise between RSM and Manpower. Applicant warrants that Manpower arrangements made by applicant shall strictly be under the supervision of applicant. 8.1.2 The applicant shall make payment to ESI, PF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich includes Security Deposit, Rent, Food cost, Maintenance and Security charges, etc, (more fully mentioned in the Annexure to Agreement dated 15.09.2020) with effect from 01.10.2020 to 30.09.2022, however in the event the date of commencement / closure of lease / service vary, the payment by RSM to applicant will accordingly stand modified to that extent which will be incorporated in the relevant agreements. 8.2.3 It is agreed that if the Factory not in operation or operating with the very lean work force, the service charges shall be reduced proportionately by RSM. 8.2.4 It is agreed between the parties that in the event the RSM is not in a position to utilize the services of applicant due to force majeure condition including epidemic deceases or due to reasons attributed to applicant, RSM shall have no obligation to pay for the services ordered but not utilized and also if the RSM is of the opinion that the possibility of the usage of the services of applicant is difficult to determine, RSM has the option to terminate this agreement at a shorter written notice of seven days. 8.2.5 In case the tax authorities recover any amount from RSM towards non-deduction of tax or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ike service receivers expecting such services to be provided as package or majority service providers providing such services in bundled form, etc. 8.4.4 With the guidance from flyer, it becomes clear that the intention of the receiver supplier is more relevant. Hence, based on the above points they are stating that the agreement by client demands for hostel services when there is need and it is not related to the number of headcounts sourced through Good Hands. 8.4.5 The agreement neither solicits supply of manpower with hostel services for single price (mixed) nor in a bundled (composite) form. 8.4.6 Even within the hostel services the agreement stated that services as obtained from each service provider is to be billed as such to client with specific conditions against each element within the service. 9.1 The applicant has raised various questions revolving around eligibility to claim ITC on several services / goods procured and the value of such invoices recovered from client through different invoices at same rate of GST on same value and certain supply as pure agent to client. The question before us to decide is whether the applicant is entitled to claim input t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agent.- 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 third party on authorisation by such recipient; (ii) the payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service; and (iii) the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account. Explanation . - For the purposes of this rule, the expression - pure agents means a person who- (a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both; (b) neither intends to hold nor holds any title to the goods or services or both so procured or supplied as pure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , such rules may provide for - (a) the date by which the canteens shall be provided, (b) the number of canteens that shall be provided, and the standards in respect of construction, accommodation, furniture and other equipment of the canteens; and (c) the foodstuffs which may be served therein and the charges which may be made thereof. 10.1 Now, we proceed to deliberate on the scope of supply envisaged in the Manpower Supply Agreement dated 14.09.2017 discussed in para 8.1 supra and Renewal cum Amendment Agreement of Manpower Supply (Dorm-16-ACT Campus - Good Hands - TN) dated 15.09.2020 discussed in para 8.2 supra. Both the agreements are between the applicant and M/s Rising Stars Mobile Private Limited (RSM), the service recipient. 10.2 The Manpower Supply Agreement, inter alia, provides that Manpower means male or female personnel of applicant aged not less than 18 years being engaged by applicant as casual labourers, permanent employees, contract employees, consultants or engaged in any other capacity by applicant and sent by applicant to RSM to undertake the task for RSM. RSM would provide task schedule as deemed fit by RSM and applicant shall supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the RSM is of the opinion that the possibility of the usage of the services of applicant is difficult to determine, RSM has the option to terminate this agreement at a shorter written notice of seven days. In case the tax authorities recover any amount from RSM towards non-deduction of tax or disallows any expenditure u/s 37 of IT Act, 1961 with respect to the payments made to applicant along with interest and penalty the RSM shall be entitled to recover the same along with interest from applicant. All the terms and conditions of Parent / Renewal / amendment agreements shall remain mutatis mutandis, remains unchanged and therefore all other terms, conditions, covenants, rights and obligations of the parties arising out of the Parent / Renewal / Amendment agreement shall continue to bind and govern the parties. 10.6 As per Expenses Statement as Annexure 1A to Housekeeping Maintenance Services Agreement dated 16.09.2020, Drinking Water and Electricity bills will be paid on actuals based on EB bills issued by TNEB. Management fee of 10% will be applicable for the same. Management Fees @ 10% on the monthly service fee applicable for Repairs maintenance, Recreation cost, Pest c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses incurred by applicant fails the test of pure agent as per Rule 33. Consequently, any amount, other than GST, received by applicant from RSM, including electricity charges and Diesel expenses, shall form part of taxable value as per Section 15 of the Act and attract GST rate, as applicable to supply of manpower service. 10.9 From the invoices given by vendor to applicant for food supply, it is ascertained that the applicant is engaging more than 100 workers and therefore, the provisions of Section 16 of the Contract Labour (Regulation and Abolition) Act, 1970 (CLRA Act) read with Rules 42 to 50 of The Tamil Nadu Contract Labour (Regulation and Abolition) Rules, 1995 stipulates that labour contractor shall provide the canteen facility to the labour employed by the contractor. Thus, there is a mandate to the applicant to provide canteen facility to the contractual worker. We find that ITC on foods, beverages, outdoor catering is not blocked, provided it is obligatory for an employer to provide the same to its employees under any law for the time being in force as per proviso to Section 17 (5) (b) after its substitution with effect from 01.12.2019 based on the recommendation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 970. 3. Electricity charges of hostel premises taken on rent reimbursed from service recipient does not qualify for exclusion from value of supply as pure agent, as the same was consumed in the hostel premises used by the workers who are employees of the applicant. The amount received by the applicant from the service recipient shall be a consideration includible in the taxable value for supply of manpower under Section 15 of the Act and GST shall be paid at the rate of 18%, as applicable to supply of manpower service. 4. Diesel charges for back up gensets at hostel premises reimbursed from service recipient does not qualify for exclusion from value of supply as pure agent, as the same was used for gensets in the hostel premises used by the workers who are employees of applicant. The amount received by the applicant from the service recipient shall be a consideration includible in the taxable value for supply of manpower under Section 15 of the Act and GST shall be paid at the rate of 18%, as applicable to supply of manpower service. 5. Amount received by applicant from manpower service recipient towards Rent, Building maintenance, Security service, Housekeeping and mainte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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