2024-VIL-52-AAR
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SGST Advance Ruling Authority

GST – Tamil Nadu AAR - Scope of Supply - Applicability of GST - Canteen facility, recovery of premium of Medical Insurance Policy, transportation facility - Input Tax Credit – Staff car, vaccination and other health benefits, gardening expenses - Applicability of GST on recovery of nominal amount from employees for availing the facility of Canteen at the factory premises – HELD - in order to place any service provided by the employer to employee outside the ambit of GST, the same should be in the form of a perquisite - in respect of the canteen services provided by the applicant to its employees, the exemption provided in Entry 1 of Schedule III to the CGST Act, 2017 applies only to the concession extended to the employees and not on the value charged on the employees - the canteen service provided by the applicant company on its own account to its employees, is a composite supply which gets treated as a supply of service in terms of Entry No.6 of Schedule II to the CGST Act, 2017 - the amount charged on the employees by the applicant, whether nominal or otherwise, is to be treated as the consideration for such supply of canteen service on its own account to its employees on which GST is liable to be discharged by the applicant-employer – Ordered accordingly - Whether Input Tax Credit is available on facility of canteen service provided to employees by applicant as statutory obligation under Factories Act – HELD - ITC is admissible on the supply of all the goods or services referred in section 17(5)(b) of the CGST Act, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force - GST charged on the inward supplies received, if any, in relation to the provision of food to the employees by the applicant is admissible as ITC to them, provided the number of direct employees in the establishment is more than 250. Further, while availing such ITC, the proportionate credit to the extent of cost recovered from such employees is required to be reversed by the applicant/employer - Whether GST is applicable on the recovery of premium of Medical Insurance Policy from the employees for them and their dependents at actuals under the HR Policy – HELD - applicant is just a facilitator in the transaction relating to insurance, and practically no supply of service is made in the course or furtherance of business by the applicant in the instant case. Since the provision of this insurance cover to the employees and their dependents is provided in terms of the HR policy of the Applicant-Company, the same is to be treated as a contractual agreement entered into between the employer and the employee in accordance with clause 1 of Schedule III of the CGST Act, 2017, which is neither a supply of goods nor a supply of service - As per Section 7(2) of the CGST Act, Schedule III supersedes Schedules I and II, which means that even if it is considered as a supply under Section 7(1), no tax will be payable in view of the provisions contained in clause 1 of Schedule III - Accordingly, no supply of service by the applicant is present in the instant case involving the collection and remitting of insurance premium to the insurance companies, and therefore GST is not liable to be discharged on such cases - Whether GST is applicable on recovery of nominal amount from employees for using of transportation facility to and from the factory and office premises provided to the employees in the course of employment – HELD – No supply of service by the applicant is present in the instant case involving the transportation facility extended to the employees through a third party, and therefore GST is not liable to be discharged on such cases - Whether GST is applicable on facility of Car extended to the employees of the Company in the course of employment – HELD – any service rendered free of charge or any service rendered on a concessional basis shall qualify as a perquisite. In the instant case, having paid the lease premium directly to car leasing company, the applicant deducts the amount to the extent of cost incurred by Applicant-Company from the Salary of the related employees - Once the applicant themselves admit that they do no bear any cost, or any portion of the cost incurred, and when the entire lease premium is recovered from the salary of the employees concerned, the amount recovered do not qualify as a ‘perquisite’ by any means whatsoever, and therefore the transaction in the instant case, do not get covered within the ambit of entry 1 of Schedule III of the CGST Act, 2017. Moreover, in such cases, the cars are normally booked under the name of the company/organization, and it remains with them for a specific period, or until the lease period is over. Therefore, when the applicant provides the said service to their employees on their own account, and when the element of ‘perquisite’ is absent in the instant case, GST is applicable on the facility of Car extended to the employees of the Applicant-Company, even if it is in the course of employment - Eligibility to Input Tax Credit on expense incurred for the well being of employees such as vaccination and other benefits – Whether ITC is blocked under section 17(5) of the CGST Act, 2017, in respect of the expenses related to medicinal facilities extended to the employees - HELD - As per Section 17(5)(b) of the CGST Act, 2017, the supply of goods or services or both in relation to health services cannot be availed as ITC, unless it is obligatory for an employer to provide the same its employees under any law for the time being in force – inspite of applicant’s claim that providing medical facility is part of service contract, the applicant has not adduced any details or documentary evidence in support of the same - Moreover, even in the event of considering the same as an obligation on the part of the employer, the same should be mandated under any law for the time being in force, and this aspect has not been substantiated by the applicant - Input Tax Credit cannot be availed on the expense incurred for the well-­being of employees such as vaccination and other health benefits extended to them - Whether Input Tax Credit is available on GST charged for gardening expenses incurred by the applicant – HELD - Gardening and maintenance of green belt in and around the applicant’s premises is an activity in the course or furtherance of business that is mandatorily required to be carried out by the applicant. Accordingly, ITC is available on the input services received by the applicant in relation to gardening activities carried out within the factory premises.
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