Canteen Services under ITC
|
Case Title |
Tata Motors Limited |
|
Court |
Gujarat AAAR |
|
Honorable Judges |
Member Milind Torwane and Member Vivek Ranjan |
|
Citation |
2022 (12) GSTPanacea 389 HC Gujarat GUJ/GAAAR/APPEAL/2022/23 |
|
Judgement Date |
22-December-2022 |
|
Council for Petitioner |
Mr Rajesh Shukla |
|
Council for Respondent |
Not applicable |
|
In favour of |
Revenue |
|
Section |
Under Section 100, 17(5)(b), 17 of the CGST Act, 2017 |
The Appellate Authority for Advance Ruling, Gujarat bench of Member Milind Torwane and Vivek Ranjan, held that the arrangement of canteen by the Applicant is run by a Third-Party Canteen Service Provider (“CSP”) due to which the Appellant recovers nominal amount on monthly basis. The expenditure of the service is borne solely by the Applicant and thus is part and parcel of cost to the company.
FACTS OF THE CASE
In M/s Tata Motors Ltd. [Advance Ruling No. GUJ/GAAR/R/39/2021 dated July 30, 2021], M/s Tata Motors Ltd (“the Applicant”) has sought a clarification whether Input Tax Credit (“ITC”) will be available on Goods and Services Tax (“GST”) charged by service provider on canteen facility provided to employees working in factory and whether the same would be restricted to extent of cost borne by the Applicant. Along with that it has also been sought if GST is to be applicable on Nominal amount received by Applicant for usage of the canteen facility by the employees.
Canteen Services under ITC
COURT HELD
The Hon’ble Gujarat Authority of Advance Ruling (“GAAR”) interpreting Section 17(5)(b)(i) and 17(5)(b)(iii) of Central Goods and Services Act, 2017 (“CGST Act”) which provides for supply of goods and services, observed that the two clauses are not connected to each other on the basis of punctuation used at the end of provisions. Laid down the principle that “Colons and semicolons are two types of punctuation” whereby “Semicolons are used to join two independent clauses/ subclauses, or two complete thoughts that could stand alone as complete sentences”.
Further observed ITC on GST paid on Canteen Facility is blocked credit under Section 17(5)(b)(i) of the CGST Act and thereby the same being inadmissible. GST is not leviable on the Applicant on the amount which represents employees’ canteen charges.
Noted that the arrangement of canteen by the Applicant is run by a Third-Party Canteen Service Provider (“CSP”) due to which the Appellant recovers nominal amount on monthly basis. The expenditure of the service is borne solely by the Applicant and thus is part and parcel of cost to the company.
Canteen Services under ITC
ANALYSIS OF THE JUDGEMENT
As per the above case we analyse that that supply by the employer to the employee in terms of contractual employment agreement entered into between employer and employee will not be subjected to GST.
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Tata Motors Limited
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Gujarat AAAR