Page 189 - GSTL_23rd July 2020_Vol 38_Part 4

2020 ] IN RE : ORDNANCE FACTORY, BHANDARA 555
ing the guest house facility, are not available. In the present case, it has been
submitted by the Appellant that they are recovering the room charges from the
guests occupying the guest house. Hence, by applying the ratio of the above dis-
cussed CESTAT Judgment in the facts and circumstances of the present case, we
conclude that the ITC in respect of any of the inputs or input services pertaining
to the guest house is not available to the Appellant as the Appellant themselves
have submitted that they are recovering room rent for availing guest house facili-
ties. Thus, the above discussed CESTAT Mumbai Order, cited by the Appellant
in support of their contention has emerged out to be rather adverse for their con-
tention, and has instead supported the ruling pronounced by AAR, wherein the
ITC under question has been denied.
103. Further, as the Appellant is charging rent from the guests availing
the guest house facilities, which may be considered as exempt supply in terms of
Sr. No. 6 of the Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017 as
the Appellant, as discussed above, has been held to be the Central Government.
Therefore, No ITC is available against the said exempt supply in terms of the
provision of Section 17(2) of the CGST Act, 2017. Therefore, the ITC in respect of
the inputs and input services pertaining to the guest houses will not be available
to the Appellant.
104. Now, let us examine the issue of admissibility of ITC, raised by the
Appellant, in question 2(e) of the advance ruling application, wherein they had
asked as to whether they were eligible to avail ITC in respect of the expenditure
related to purchase of LPG cylinders used within industrial canteen. Here, it was
ruled by the AAR, Maharashtra that since their canteen is providing services re-
lated to supply of food and beverages to their employees and also charging con-
sideration for the same, thereby rendering such services leviable to GST regime,
therefore, ITC in respect of LPG cylinders being used to provide such taxable
services related to supply of food and beverages to their employees are available
to the Appellant.
105. However, the Appellant have contended that allowing the avail-
ment of ITC on the aforementioned grounds by AAR, Maharashtra is incorrect in
the light of the fact that Ordnance Factory Bhandara is “Central Government”
and hence eligible for ‘NIL’ rate of tax on such supply of food and beverages
made to the factory employees that are non-business entities in terms of Sr. 6 of
the Notification No. 12/2017-C.T. (Rate), dated 28-6-2017. They, further, submit-
ted that as per Section 9 of the CGST Amendment Act, 2018 that is in force from
1-2-2019, an amendment in Section 17(5)(b) of the principal CGST Act, 2017 has
been brought about where input tax credit shall not be available in respect of
supply of food and beverages except where the provision of such goods or ser-
vices or both is obligatory for an employer to provide to its employees under any
law for the time being in force. Now, as per Section 46 of the Factories Act, 1948,
the State Government may make rules requiring that in any specified factory
wherein more than two hundred and fifty workers are ordinarily employed, a
canteen or canteens shall be provided and maintained by the occupier for the use
of the workers. In this connection, it is submitted here that more than 2500 per-
sons have been employed by Ordnance Factory Bhandara and thus the afore-
mentioned provision relating to maintenance of canteen is obligatory for Ord-
nance Factory Bhandara to provide to its employees under the Factories Act,
1948. So, an industrial canteen has been provided by Ordnance Factory Bhandara
for its employees within the factory where the employees have food and bever-
ages by paying a nominal amount of money on no-profit-no-loss basis.
GST LAW TIMES  23rd July 2020  189