TMI Blog2024 (4) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... esponsible for paying the salary, and depositing the EPF, ESIC etc pertaining to the labour / employee supplied by him to the principal employers. The applicant through the labour / employee is supplying security service, cleaning service etc to the recipients of services as per their requirement and hence the total consideration charged by the supplier of labour shall be the taxable value for the purpose of GST. Further with regard to the applicant s submission that the payment to these employees is only routed through them and does not constitute to their income, we find that the applicants understanding is misplaced. Unlike Income Tax which is a direct tax levied on the income of the individuals and business, GST is an indirect tax applicable to the supply of goods and services and is leviable on the consideration in relation to the supply of goods or services or both. As can be seen from Section 15 of the CGST Act, 2017., there is intent to include even all taxes, duties, cesses, fees and all charges, including the amount that the supplier is liable to pay in relation to such supply, but which has been incurred by the recipient of supply, in the value of supply. Hence it can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Tamil Nadu State Appellate Authority for Advance Rulings, Chennai as under Sub-Section (1) of Section 100 of CGST Act / TNGST Act 2017, within 30 days from the date on the ruling sought to be appealed is communicated. 2. In terms of Section 103(1) of the Act, Advance Ruling pronounced by the Authority under Chapter XVII of the Act shall be binding only- (a) on the 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. Advance Ruling obtained by the applicant by fraud or suppression of material facts or misrepresentation of facts, shall render such ruling to be void ab initio in accordance with Section 104 of the Act. 5. The provisions of both the Central Goods and Services Tax Act and the Tamil Nadu Goods and Services Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dental to the purpose of the factory or establishment iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service; 3.3 The applicant further relied on the following case laws i) The employee supplied by the contractor is working inside the factory premises and are under direct control of the Principal Employer. ( Calcutta Electricity Supply Corporation Ltd. and ors. Vs. Subhas Chandrabose-1992(1) LLJ. 475)) ii) The employees of the cycle stand and canteen run by contractors in cinema theatre by contractors are employees ( Royal Talkies, Hyderabad Vs. EST Corporation (AIR-1978 S.C. 1478)) iii) The respondents are directed not to deduct any GST or Service Tax from the salary of the employees sponsored by UPNL. ( Kundan Singh vs the State Others Writ Petition No. 116 of 2018 (PIL) In The High Court Of Uttarakhand At Nainital) 3.4 Based on the Above Laws/Rulings the applicant was of the opinion that when a person is employed in the factory premises either directly or through contractor and directly under the control and management of principal employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployees supplied by the contractor loses the status Employee when there exists employee-employer relationship and the principal has control over such employee including supervision. The service of such employee is not taxable according to section 15 read with the explanation to it; the status of employees engaged through contractor is on par with the employees directly employed by the Principal employer; All labour enactment consider those employees as employees only; the CGST Act does not define the term employee. In such circumstances other enactment including Industrial Disputes Act must be referred to; Advance Ruling is sought only upon the status of contract employee and whether his service rendered is taxable service; the Honourable Members have deviated from the issue raised and advance ruling sought for and considered the proceedings by the Tax Authority which is entirely different. The proceedings comes to play only when the question as to the service rendered by the contract employees is taxable service or not is decided; the Honourable Members paid attention to the proceeding which is consequential to the ruling confirming the status of contract employee and the service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not file Advance ruling application with questions on an issue for which proceedings have already been initiated against the applicant. The Members also stated that since the present application is filed after such proceedings are initiated, the same may not be admitted as per first proviso to Section 98(2) of the CGST Act, 2017. 7.4 However, after the personal hearing the authorized representative of the applicant vide E-mail dated 17.01.2024 submitted that the Members have deviated from the issue raised and advance ruling sought for and considered the proceedings by the Tax Authority which is entirely different. That the proceedings comes to play only when the question as to the service rendered by the contract employees is taxable or not is decided. The applicant has also submitted that the proceeding commenced by the authorized officers is not directly related to the issue upon which Advance Ruling is sought for. 7.5 The questions raised in advance ruling application is whether GST is payable only on the service charges / commission or Income received by whichever name by the Agency Supplying Manpower and not on the salary / wages and related payments made to the Employees. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services; (d) interest or late fee or penalty for delayed payment of any consideration for any supply; and (e) subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments. As per Section 2(31) of the CGST Act, 2017, the entire payment received by the applicant will be considered as consideration and GST would be payable on the entire amount received for provision of services which includes the salary / wages and other related payments made to the employees in the instant case. Further, Section 15 of the CGST Act, 2017 clearly stipulates that the value of 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 or services where the supplier and the recipient are not related and the price is the sole consideration for the supply. The value of supply shall include any taxes, duties, cesses, fees and charges levied under any law for the time being i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the workmen by the State Government as well as local bodies and Honourable High Court of Uttarakhand while disposing the Writ Appeal apart from the direction mentioned supra, also directed the State Government to regularize the employees sponsored through UPNL within a period of one year as per regularization schemes framed from time to time and to ensure that the employees sponsored by UPNL get minimum of pay-scale with dearness allowance along with arrears. We find that the case is one where the aggrieved employees through their union have filed a Writ Appeal seeking better pay and the Honourable High Court of Uttarakhand while providing relief has directed not to deduct any GST or Service Tax from the salary of the employees sponsored by UPNL. We find that here the emphasis is to be laid on the word from . The intention is not to deduct GST or Service Tax from the salary of the employees so that the salary of the persons appointed through UPNL, which is lesser compared to the regularly appointed counterparts, is not further reduced. We find that the above ruling has no bearing on the issue raised by the applicant in the subject application. 7.10 We find that it is imperat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailment of input tax credit etc. It is a fact that the case was initiated on 12.11.2020 by the Headquarter Preventive Unit, Trichy GST Commissionerate and a DRC-01A dated 15.06.2023 was issued by the Headquarter Preventive Unit, Trichy GST Commissionerate which consequently resulted in issuance of show cause notice dated 30.06.2023. 7.14 Chapter XVII Advance Ruling is a benevolent piece of legislation in the Act with an objective to obviate litigation at initial stage of the issues arising in tax matters to taxpayers including any unregistered persons intending to commence any business activity. It provides an opportunity to all entities both commercial and non-commercial, Government and quasi-Government, statutory bodies, etc., hitherto not registered under any of the indirect tax laws to seek clarification on the taxability or otherwise of their activities after introduction of the GST Act, 2017, where the applicant is also not an exception. Vide first proviso to Section 98(2) which restricts admitting application seeking advance ruling on questions which are already pending in any proceedings, an important check mechanism has been inserted so that the Advance Ruling mechanism do ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
