Page 175 - GSTL_23rd July 2020_Vol 38_Part 4

2020 ] IN RE : ORDNANCE FACTORY, BHANDARA 541
NIL rate of tax. Since the Appellant, which has been established as ‘Central Gov-
ernment’ as described herein-above, is supplying the services of tolerating the
non-performance of a contract against the Liquidated Damages and security de-
posit forfeited by the suppliers, which are covered under the aforementioned Sr.
No. 62 of the Exemption Notification No. 12/2017-C.T. (Rate), dated 28-6-2017
attracting Nil rate of GST. Hence, GST will not be applicable to the aforesaid
transactions/activities carried out by the Appellant, as have been described un-
der question 1(a) and 1(b) of the Advance Ruling application.
55. Since, the Appellant has not appealed against the ruling pro-
nounced in respect of the question 1(c) of the Advance Ruling Application filed
by them, the same is not being considered here for the discussion and ruling
thereupon.
56. Now, we will examine question 1(d) asked by the Appellant as to
whether Food and beverages supplied at industrial canteen inside the factory
premises will attract GST or not. In this regard, the Appellant has submitted as
under :
As per Clause 6 of Schedule II to the CGST Act, 2017, “supply, by way of
or as part of any service or in any other manner whatsoever, of goods,
being food or any other article for human consumption or any drink
(other than alcoholic liquor for human consumption), where such supply
or service is for cash, deferred payment or other valuable consideration”
shall be treated as a supply of services. There is an industrial canteen in-
side the factory premises that serves food and beverages to employees of
the factory. Neither is alcoholic liquor served in the industrial canteen
nor is the industrial canteen air-conditioned. Nominal charges for such
food and beverages are recovered from the employees on no profit basis
in order to cover the day-to-day expenditure of the canteen. Such indus-
trial canteen is run by the factory itself and no outdoor caterer is in-
volved in providing services related to supply of food and beverages.
Thus, such supply of food and beverages by the factory to factory em-
ployees inside the industrial canteen falls within the category of ‘ser-
vices’ as per the aforementioned clause 6 of Schedule II to the CGST Act,
2017. However, in terms of the aforementioned Sr. No. 6 of the exemp-
tion list on supply of services as per Notification No. 12/2017-Central
Tax (Rate), supply of services by the Central Government to non-
business entities attract ‘NIL’ rate of tax. Since such supply of food and
beverages is being made to factory employees, who are in the nature of
non-business entities, the charges recovered by the factory from such
employees for such supply attracts ‘NIL’ rate of tax since Ordnance Fac-
tory Bhandara is “Central Government” as explained above. The AAR,
Maharashtra had ruled that the said exemption is not applicable to Ord-
nance Factory Bhandara since it is not “Government”
57. Since, it has been established that Appellant can be construed as
Central Government and the activities carried out by the Appellant by way of the
supply of foods or drinks in the canteen, located inside the factory premises shall
be treated as supply of services in terms of clause 6(b) of the Schedule II to the
CGST Act, 2017, it may adequately be inferred that the aforementioned activities
described under question 1(d) of the Advance Ruling Application, i.e. supply of
foods or drinks in the canteen, located inside the factory premises, will get cov-
ered under the scope of activities described at Sr. No. 6 of the Notification No.
GST LAW TIMES  23rd July 2020  175