2021-TIOL-36-AAAR-GST
Bharat Oman Refineries Ltd
GST - AAR had held that Tax is applicable on payment of notice pay by an employee to applicant employer in lieu of notice period in view of clause 5(e) of schedule II of CGST Act; that Premium of Group Medical Insurance Policy recovered by applicant from the non-dependent parents of employees & retired employees will fall within the ambit of supply and is liable to GST; that Employer and employee are related persons as per Explanation to Section 15 and, therefore, the valuation of canteen facility provided by applicant to its employees shall be as per Rule 28 and not at the nominal amount recovered by applicant from its employees; that Applicant-company is liable to pay GST on the amount recovered from its employees towards telephone charges at actuals; that in respect of the tax payable/paid by the applicant in respect of premium paid of Group Medical Insurance policy, canteen facility and telephone charges, the applicant is eligible to claim ITC on the same since they are not blocked credits u/s 17 of the Act; that Canteen services provided to the employees are to be treated as supply even if there is no consideration and that it will be liable to tax as per value determined in accordance with Rule 28; that i n respect of canteen services provided by applicant to its employees without charging any amount (free of cost), applicant is not eligible to claim ITC - Appeal is filed against this order of AAR.
Held:
+ GST is not applicable on payment of notice pay by an employee to the applicant-employer in lieu of notice period since m erely because the employer is being compensated it does not mean that any services have been provided by him or that he has 'tolerated' any act of the employee for premature exit - Ratio of Madras High Court decision in GE T & D India Ltd. [ 2020-TIOL-183-HC-MAD-ST ] is squarely applicable to the present case: AAAR
+ GST is not payable by the employer on the amount of premium paid towards Group Medical Insurance policy of non-dependent parents recovered from employees and from retired employees since the activity undertaken by the applicant like providing of mediclaim policy for the employees' non-dependent parents/retired employees through insurance company neither satisfies conditions of Section 7 to be held as “supply of service” nor it is covered under the term “business” of Section 2(17) of CGST ACT 2017: AAAR
+ GST is not payable by the employer on recovery of “nominal" amount for availing the facility of canteen as it is only a facility provided to employees, without making any profit and working as mediator between employees and the contractor / Canteen Service Provider - GST is not applicable on the collection, by the appellant, of employees' portion of amount towards foodstuff supplied by the third party / Canteen Service Provider : AAAR
+ GST is not payable on recovery of telephone charges from the employees over and above the fixed rental charges payable to BSNL as activity undertaken by the applicant like providing of telephone facility to employees through BSNL neither satisfies conditions of Section 7 to be held as “supply of service” nor it is covered under the term “business” of Section 2(17) of CGST ACT 2017: AAAR
+ Input credit of GST paid to BSNL on usage charges recovered from employees would not be available to the appellant as they are not providing any outward supply of telephone services and the facility is also not attributable to the purposes of their business in terms of Section 17(1) of the CGST Act: AAAR
+ Input credit of GST paid to the insurance provider would not be available to the applicant as health insurance is in the excluded category under Section 17(5) of the CGST Act and as said insurance services are not any outward supply of the applicant: AAAR
+ Input credit of GST paid to canteen service provider would be available to the appellant in terms of proviso under Section 17(5)(b) where it is obligatory for an employer to provide the same to its employees under any law: AAAR
+ Provision of canteen services to all the employees without charging any amount (free of cost) will not fall under Para 1 of Schedule III of GST Act as there is nothing on record to show that the said facility provided to employees is part of the wage structure: AAAR
- Appeal disposed of: AAAR |
