Levy of GST— In the instant case, the applicant (RITES Limited) is a multi-disciplinary consultancy organization in the fields of transport, infrastructure and related technologies. It provides a comprehensive array of services under a single roof and believes in transfer of technology to client organizations.

Questions on which Advance Ruling is being sought:-

1. Whether the amount collected by the Applicant company as Notice Pay Recovery from the outgoing employee would be taxable under GST law and if yes, rate of GST thereupon?

2. Whether the amount of Surety Bond forfeited/encashed by the Applicant company from the outgoing contractual employee would be taxable under GST law and if yes, rate of GST thereupon?

3. Whether GST would be payable on nominal & subsidized recoveries made by the Applicant from its employees towards provision of canteen facility by 3rd party service provider to Applicant's employees and if yes, rate of GST thereupon?

4. Whether the amount collected by the Applicant company from its employees in lieu of providing a new identity card (ID Card) would be chargeable to GST and if yes, rate of GST thereupon?

5. Whether the amount collected by the Applicant as liquidated damages for non performance/short-performance/delay in performance is taxable under GST and if yes, rate of GST thereon?

6. Whether the amount forfeited by the Applicant company pertaining to Earnes Money, Security Deposit & Bank Guarantee due to the reasons mentioned sapra would be chargeable to GST and if yes, rate of GST thereon?

7. Whether the amount of Creditors balance unclaimed/untraceable and written off by the Applicant by way of crediting P&L Account is taxable and if yes, rate of GST thereon?

Each transaction/activity done by the applicant on which he has sought the advance ruling is being discussed as following;-

1. Notice pay recovery and surety bond forfeiture:- Notice pay does not result into the provision of service by either party, it is sort of compensation either to employee or employer and not a consideration. It is a safety valve sort of option to both the parties i.e. if one of the party frustrate the employment contract either by reneging or by failing to perform. It is the employee who is the service provider and service supplied by him in the course of its employment is excluded from the definition of Supply under the GST Act.

2. Provision of the canteen facility at its premises by the applicant company for its employees:-There is no independent contract between the applicant and the employees for setting up the canteen facility at the company's premises. It is being undertaken on account of the legal obligation case upon the applicant. So, it is concluded that the said transaction of recovering the part payment of the meals from the staff by the applicant is outside the purview of scope of supply.

3. Whether the charges for re-issuance of ID card to the employees by the applicant company is an taxable event under the GST Act? The Id-card is reissued in case of loss of the same or the card is in non serviceable condition. In this matter, the authority is of view that this transaction does not fall under the taxable event under the GST as it's covered under the Schedule III(1) appended with the CGST Act, 2017.

4. Taxability on the transaction of liquidated damage charged due to delay in completion of work and forfeiture of Earnest Money/ Bank Guarantee /Security Deposit:- Factual as well as legal detail of the transactions of the matter is examined by us along with the details of the copy of Tender flouted/issued by the applicant company for the works. The authority is of view that the matter stands clarified in the circular dated 03.08.2022 of the Board. It's decided accordingly.

5. Taxability of amount written off in the books of account of the applicant as creditors balance:- The authority is of view that there are no services received or provided by the applicant company in the above mentioned situations/transactions. So, this transaction of writing off unclaimed amount of the contractors/other creditors is basically an income and not a supply, hence outside the purview of scope of supply under the GST Act.

Held that— On examination of the factual and legal aspects and documentary evidence and the rulings of various authorities submitted by the applicant and from the above discussion and in the light of legal provisions and the circular of the Board dated 03.08.2022, it can be said that none of the above transactions on which the applicant has sought the advance ruling regarding the taxability under the CGST Act, 2017 falls under the scope of supply.