In the matter of Tata Motors Limited
Gujarat AAAR modifies AAR by holding Tata Motors (appellant) eligible to input tax credit (ITC) on GST charged by service provider on canteen facility to its direct employees working in the factory but not to contractual employees, visitors etc; Citing CBIC’s clarification in Circular No. 172/04/2022-GST dated July 06, 2022 along with the statutory framework surrounding ‘blocked credit’, particularly, section 17 (5) of under GST observes that “ITC on GST charged by the canteen service provider will be available only to the extent of cost borne by the appellant, for providing the canteen services only to its direct employees”; Applies ratio laid down by Bombay HC in case of Ultratech Cement though delivered in the context of service tax; On the basis of placement of punctuation viz. colon(:) and semicolon (;) in sub-clause of Section 17(5)(b)(i) of the CGST Act, the AAR held that semicolon creates a wall for conveying mutual exclusivity between the sub-clauses and therefore is to be read independently; AAR thus concluding that ITC on GST paid on canteen facility is ‘blocked credit’ under Section 17(5)(b)(i) of CGST Act and inadmissible to applicant, opined that “the proviso to section 17(5)(b)(iii) is not connected to the sub-clause of Section 17(5)(b)(i) and cannot be read into it”; To corroborate its findings AAAR, on the aspect relating to whether ITC will be restricted to the extent of cost borne by appellant, reading amended Section 17(5)(b) of the CGST Act, refers to the Press Note issued pursuant to 28th GST Council Meet stating that scope of ITC is being widened and it would now be available in respect of goods or services which are obligatory for an employer to provide to its employees under any law for the time being in force; AAAR also records submission of appellant that they will not take ITC to the extent applicable on the amount of canteen charges recovered from their employees and will reverse the credit to that extent; In conclusion, clarifies that ITC will be available to appellant in respect of food & beverages as canteen facility, is obligatorily to be provided under the Factories Act, 1948, to its direct employees working in the factory