Levy of GST— The present appeal has been filed against the order of Authority for Advance Ruling.

The following question, which is the very same as posed before AAR, have been posed before the Appellate Authority: -

i. Whether GST is applicable on payment of notice pay by an employee to the applicant - employer in lieu of notice period under clause 5(e) of Schedule II of GST Act?

ii. Whether GST is applicable on the amount of premium of Group Medical Insurance Policy recovered at actuals from non-dependent parents of employees and retired employees those who are covered under the said Policy?

iii. Whether GST is applicable on recovery of nominal amount for availing the facility of Canteen at the Refinery at Bina when when it is not a supply as per clause 1 of Schedule II of GST Act?

iv. Whether GST is applicable on recovery of telephone charges from the employees over and above the fixed rental charges payable to BSNL?

v. Whether full ITC is applicable to the applicant in respect of question Nos. II, III & IV or ITC will be restricted to the extent of GST borne by the applicant-employer?

vi. Whether the provision of canteen services to all the employees without charging any amount (free of cost) will fall under Para 1 of Schedule III of GST Act and will not be subjected to GST?

vii. If reply in Q. 6 is yes, whether in view of explanation to Section 17(3) of GST, ITC shall be available to the applicant on the goods and services used in the activity of provision of free canteen services to the employees?

In respect of question no. 1, this authority found that merely because the employer is being compensated does not mean that any services have been provided by him or that he has 'tolerated' any act of the employee for premature exit.

In respect of question no. 2, this authority found that the activity undertaken by the applicant like providing of medi-claim 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. 

In respect of question no. 3, this authority found that the Goods and Services Tax is not applicable on the activity of collection of employees' portion of amount by the appellant, without making any supply of goods or service by the appellant to its employees.

In respect of question no. 4, this authority found that the 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. Accordingly, facilitating telephone connection to employees upon recovery of usage charges on actuals cannot be considered as 'supply of service'.

Held that— 

1. GST is not applicable on payment of notice pay by an employee to the applicant-employer in lieu of notice period.

2. 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.

3. GST is not payable by the employer on recovery of nominal amount for availing the facility of canteen.

4. GST is not payable on recovery of telephone charges from the employees over and above the fixed rental charges payable to BSNL.

5 (a) 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.

5 (b) 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.

5 (c) Input credit of GST paid to canteen service provider would be available to the appellant in terms of proviso under Section 17(5)(b) that the input tax credit in-respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law.

6. 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.