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Odisha AAR Ruling on ITC on Exempt Services with Charged GST – EFC Logistics Case

editor — Sat, 06 Jul 2024 06:15:51 +0000

Introduction:

The Odisha Authority for Advance Ruling (AAR), in the matter of EFC Logistics India Pvt. Ltd. (In Re: EFC logistics India (P.) Ltd., [ORDER NO. 08/ODISHA-AAR/2023-24 dated May 24, 2024]), addressed whether a recipient can claim Input Tax Credit (ITC) on exempt services where the supplier has charged GST. This ruling pertains to the applicability of GST on renting of vehicles, which is exempted under Notification No. 12/2017-Central Tax (Rate).

Facts of the Case:

EFC Logistics India Pvt. Ltd. (“the Applicant”), a Goods Transport Agency (GTA), opted to pay GST at a rate of 12% with Input Tax Credit (ITC). They intended to engage Govinda Transport Pvt. Ltd., another GTA service provider, for vehicle rental services, including fuel, tools, driver salaries, and related expenses. These services are exempt under Entry No. 22(b) of Notification No. 12/2017-Central Tax (Rate), and the supplier did not charge GST on these exempt services.

The Applicant sought an advance ruling on whether the vehicle owner (supplier) could charge GST despite the services being exempt under the notification. Additionally, they questioned whether they could claim ITC based on invoices where GST was charged.

Issue:

Held:

The Odisha AAR, in ORDER NO. 08/ODISHA-AAR/2023-24, held as follows:

The service of renting vehicles, despite being exempt, does not fall under the activities undertaken by the Applicant, hence no ruling was provided on this aspect.
According to Section 16(1) of the CGST Act, every registered person is entitled to claim ITC on supplies of goods or services used in the course or furtherance of business, subject to the conditions and restrictions specified under Section 16.
Since the Applicant pays GST under the Forward Charge Mechanism at 12%, they may claim Input Tax Credit (ITC) provided they fulfill the conditions outlined in Section 16 of the CGST Act, even if the supplier has charged GST on exempt services.

This ruling clarifies the eligibility of recipients to claim ITC on GST charged by suppliers on exempt services under specific conditions governed by the CGST Act.

AAR Gujarat Ruling on GST for Canteen Facilities Provided by Employers

editor — Fri, 19 Apr 2024 05:43:12 +0000

In a recent ruling by the Authority for Advance Rulings (AAR), Gujarat, concerning the applicability of Goods and Services Tax (GST) on canteen facilities provided by employers, significant clarifications have been provided. This ruling, issued in the case of M/s. Suzuki Motors Gujarat Pvt. Ltd., brings clarity on the tax implications of canteen services, particularly in the context of amounts recovered from permanent employees. Let’s delve into the details of this ruling to gain a comprehensive understanding.

Facts of the Case

M/s. Suzuki Motors Gujarat Pvt. Ltd., engaged in the manufacturing of passenger cars and related parts, provides canteen facilities to its employees as mandated by the Factories Act, 1948. The company bears a significant portion of the cost of these facilities, especially for permanent employees and those on deputation from the parent company. The applicant sought an advance ruling on the GST implications of these canteen services, particularly concerning the recovery of amounts from permanent employees.

Issue

The primary issue addressed by the AAR, Gujarat, was whether GST is payable on the amount recovered from permanent employees for the canteen facility provided by the employer.

Held

The AAR, Gujarat, rendered the following key observations and rulings:

Definition of Supply: The AAR referenced Section 7 of the Central Goods and Services Tax Act, 2017, which defines 'supply' as transactions made for a consideration in the course of business. However, perquisites provided by the employer to the employee, as per the terms of their contract, are not considered within the purview of GST.
Exemption for Canteen Services: Circular No. 172/04/2022-GST clarified that perquisites provided by the employer to the employee, such as canteen facilities, are exempt from GST.
Applicability to Permanent Employees: The ruling emphasized that the canteen facility provided to permanent employees falls under the purview of employer-employee relationship and is exempt from GST.
Input Tax Credit (ITC) Eligibility: The AAR ruled that the applicant is eligible to claim ITC on the amount paid to the supplier of service for providing canteen facilities, specifically pertaining to permanent employees.
Exclusion of Temporary/Contract Workers: It was further clarified that temporary/contract workers, employees on deputation, and those on business travel do not fall under the employer-employee relationship and hence, are not exempt from GST.
ITC on Inputs: The ruling specified that the applicant is not eligible to avail ITC on inputs such as equipment and kitchen utensils used for providing canteen facilities.

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Odisha AAR Ruling on ITC on Exempt Services with Charged GST – EFC Logistics Case

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AAR Gujarat Ruling on GST for Canteen Facilities Provided by Employers

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