In Re: M/s. Caltech Polymers Pvt. Ltd.
GST
2018 (10) TMI 1313 – APPELLATE AUTHORITY FOR ADVANCE RULING, KERALA – 2018 (18) G. S. T. L. 373 (App. A. A. R. – GST)
APPELLATE AUTHORITY FOR ADVANCE RULING, KERALA – AAAR
Dated:- 25-9-2018
CT/7726/2018-C3
GST
Pullela Nageswara Rao and Rajan N.Khobragade
Sub: GST Act, 2017 – Appellate Authority for Advance Ruling U/s 99 of the Kerala State Goods and Services Tax Act, 2017 – whether recovery of food expenses from employees for the canteen provided by company comes under the definition of outward supplies is taxable under GST Act – Orders issued- reg.
Read: 1. Order No.CT/531/18-C3 dated 26-3-2018 of the Authority for Advance Ruling U/s.98 of the SGST Act 2017.
2. Appeal dated 30.04.2018 filed by M/s. Caltech Polymers Pvt. Ltd.
M/s. Caltech Polymers Pvt. Ltd., Malappuram (hereinafter called the appellant), a registered person with GSTIN 32AAACC9223A1ZE had preferred an application for Advance Ruling on whether recovery
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
and is paid monthly salary.
c) The vegetables and other items required for preparing the food items are purchased by the Company directly from the suppliers.
d) The number of times, the Canteen facility is availed, each day, by the employees is tracked on a daily basis.
e) Based on the details above, the expenditure incurred by the Company on the vegetables and other items required for preparation of food is recovered from the employees, as a deduction from their monthly salary, in proportion to the food consumed by them.
f) The company does not make any profit while recovering the cost of the food items, recovered from the employees. Only the actual cost incurred for the food items is recovered from the employees.
4. The company is of the opinion that this activity does not fall within the scope of 'supply', as the same is not in the course or furtherance of its business. The company is only facilitating the supply of food to the employees, which is a statutory requireme
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
c liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration”.
Even though there is no profit as claimed by the applicant on the supply of food to its employees, there is 'supply' as provided in Section 7(1)(a) of the GST Act, 2017. The appellant would definitely come under the definition of 'supplier' as provided in sub-section (105) of Section 2 of the GST Act, 2017.
11. The term 'consideration' is defined in Section 2(31) of the GST Act, 2017 which is extracted below:
'consideration' in relation to the supply of goods or services or both includes,-
a) any payment made or to be made, whether in money or otherwise, 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;
(b) the monetary value of any act or forb
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
having the facility of air-conditioning or central air-heating at any time during the year' was exempted from taxable services. But there is no such provision in the GST Act, 2017.”
8. Based on the deliberations delineated supra, the Advance Ruling Authority ruled vide paper read 1st above that the recovery of food expenses from employees for the canteen services provided by company would come under the definition of 'outward supply' as defined in Section 2(83) of the SGST Act, 2017 and would be taxable as a supply of service under GST.
9. Aggrieved by the said Advance Ruling, the appellant preferred appeal vide paper read 2nd above, before the Appellate Authority for Advance Ruling. The Authority heard the authorized representative of the appellant on the matter on 13th September 2018 in the Chamber of the Principal Secretary & Commissioner, State Goods & Service Tax Department, Kerala.
10. The appellant contended that as per Schedule III, Clause 1 of GST Act 2017, serv
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
r will not attract the provisions of section 9(4) and the jeweller will not be liable to pay tax under reverse charge mechanism on such purchases”.
12. Relying on the above press release, the appellant contended that if an activity is not in the course or in furtherance of one's business, it does not constitute supply unless it is an import of service as mentioned under Section 7(1) of the GST Act, 2017. It was also contended that supply of subsidized food is not the business of the appellant, in the same manner as supply of gold jewellery was held not to be the business of the consumer, in the above clarification. The appellant submitted that supply of subsidized food by the appellant does not constitute a 'supply' within the meaning of Section 7 of the GST Act, 2017 and hence does not attract GST.
13. During the Personal Hearing the authorized representative of the Appellant, in addition to the reiteration of the submissions made in the original application for Advance
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
to be considered in this case are the elements of “supply” and “consideration”. The appellant company has admitted that they are serving food to the employees for cash, though there is no profit involved in the transaction. In spite of the absence of any profit, the activity of supplying food and charging price for the same from the employees would surely come within the definition of “supply” as provided in Section 7(1)(a) of the GST Act, 2017. Consequently, the appellant would definitely come under the definition of “supplier” as provided in subsection (105) of Section 2 of the GST Act, 2017. Moreover, since the appellant recovers the cost of food items from their employees, there is “consideration” as defined in Section 2(31) of the GST Act, 2017.
15. The decision of the Hon'ble High Court of Telengana with respect to Bhimas Hotels case pertains to the erstwhile Service Tax Law, when Service Tax and Value Added Tax stood on separate and independent footing. The Hon'ble Cour
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =