In re Tata Autocomp Systems Ltd (GST AAR Gujarat)
Q1a. Whether the deduction of nominal amount by the applicant from the salary of the employees who are availing facility of food provided in the factory premises would be considered as a ‘supply of service’ by the applicant under the provisions of section 7 of CGST & GGST ?
A1(a). The deduction of amount by the applicant from the salary of the employees who are availing facility of food provided in the factory premises would not be considered as a ‘supply’ under the provisions of section 7 of the CGST Act, 2017 and the GGST Act, 2017.
Q1b. In case answer to above is yes, whether GST is applicable on the nominal amount to be deducted from the salaries of employees?
A1(b). Since the answer to the above is not in the affirmative, the ruling sought in respect of the question listed at 1(a) is rendered infructuous.
Q1ac. Whether ITC is available to the applicant on GST charged by the CSP for providing the catering services?
A1(c). Input Tax Credit (ITC) will be available to the applicant on GST charged by the service provider in respect of canteen facility provided to its employees other than contract employees working in their factory, in view of the provisions of Section 17(5)(b) as amended effective from 1.2.2019 and clarification issued by CBIC vide circular No. 172/04/2022-GST dated 6.7.2022 read with provisions of section 46 of the Factories Act, 1948 and read with provisions of Gujarat Factory Rules, 1963. ITC on the above is restricted to the extent of the cost borne by the applicant for providing canteen services to its employees, but disallowing proportionate credit to the extent embedded in the cost of goods recovered from such employees.
Q2a. Whether the services by the way of non air conditioner bus transportation facility provided by transport service providers would be construed as ‘supply of service’ by the applicant to its employees under the provisions of section 7 of CGST and GGST?
A2a. The services by the way of non air conditioned bus transport provided by TSPs would not be construed as ‘supply of service by the applicant to its employees under the provisions of section 7 GGST.
Q2b. Whether ITC is available to the applicant on GST charged by the transport service providers for providing the non air conditioned bus transportation services?
A2b. ITC is available to the applicant on GST charged by the TSPs for providing the non air conditioned bus transport services however subject to the condition that the buses hired are more than 13 seater wef 1.2.2019. ITC on the above is restricted to the extent of the cost borne by the applicant for providing transportation services to its employees, but disallowing proportionate credit to the extent embedded in the cost of goods recovered from such employees.
Q3. Whether GST is applicable on salary deducted in lieu of notice period from the full and final settlement of the employees leaving the company without completing or serving the complete notice period as specified in the appointment letter?
A3. No GST is applicable on salary deducted in lieu of notice period from the full and final settlement of the employees leaving the company without completing or serving the complete notice period as specified in the appointment letter.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, GUJARAT
M/s. Tata AutoComp Systems Ltd, Plot No. A-2, Tata Motors Vendors Park, North Kotpura, Ahmedabad, Gujarat-382110 [for short—`applicant’] is registered under GST and their GSTIN is 24AAACT1848E1ZN. The applicant is a group entity of Tata AutoComp Systems Ltd. [for short ‘TACO].
2. The applicant is engaged in the manufacture, sale and trading of automotive parts and provides products and services to the Indian and global automotive OEMs as well as other Tier I The applicant has engaged canteen service providers [for short CSP], transport service providers [for short TSP] who provide food and transportation facilities to the applicant’s employees.
3. The applicant employs 322 employees, other than contract employees and is registered under the Factories Act, 1948. The applicant has appointed CSP, who is responsible for providing skilled manpower for the preparation of food and maintenance of canteen premises.
4. Being a part of TACO, policies set out by them are applicable group entities. TACO has set out Tata AutoComp Systems Ltd Transport Policy, which states that the canteen policy is app] employees on the rolls of the Company ie Management staff, staff, workmen, trainees, temporary, etc. in Tata AutoComp Systems Ltd and its group entities based in India. They have also specifically reproduced paras 5.01 and 5.02 of their Canteen policy.
5. The applicant has also relied upon the provisions of memorandum of settlements entered into with Tata AutoComp Systems Kamdar Sangh Sanand which states that for employees availing the canteen facility, the applicant shall deduct Rs. 500/- per month from their salary except for contract employees. This deduction finds a mention in their respective salary slip also.
6. The canteen facility is provided at a nominal rate in the course of employment in pursuance of the Factory The facility is restricted to employees of the Company. Further, to avail the canteen facility, the employees would be required to display company issued employee IDs. The applicant has attached the agreement executed with the CSP as Annexure 1, employment contract as Annexure 2 and Canteen Policy as Annexure 3 with their application.
7. The applicant’s contention is that the canteen facility provided to their employees is not in the nature of supply u/s 7 of the CGST Act, 2017 & hence would not be leviable to GST owing to the following reasoning viz
