The Andhra Pradesh Authority for Advance Ruling (AAR) has held that no Goods and Service Tax (GST) would be applicable upon the amount recovered from employees for canteen and transportation facilities.
The applicant Brandix Apparel India Private Limited was engaged in the business of manufacture of apparels and export of the same outside India. The applicant had hired a third-party contractor for providing canteen services to the employees in the factory. The third-party contractor raised an Invoice on the company for provision of canteen services and recovered the amount form the employees for provisions teen facility.
The applicant had also hired a contractor for providing transportation services to the employees of the company transport services per employee per month. The applicant has sought advance ruling as to whether GST would be applicable on amount recovered from employees for canteen and transportation facilities.
Rajitha B, who appeared for the applicant submitted that the canteen services were not connected to apparel manufacturing and the services would not not fall in the ambit of supply, and the same shall neither be treated as goods nor services.
He further submitted that the amount of partial cost recovered from the employees for the bus facility provided was between employer and employee in due course of employment, and the same would not be liable to be taxed under GST law.
The Authority Bench of K. Ravi Sankar, (Commissioner of State Tax) and RV Pradhamesh Bhanu, (Joint Commissioner of Central Tax) held that no GST would be applicable on the amount recovered from employees for canteen and transportation facilities.
“The transportation services is not a supply for the applicant made in the course or furtherance of business and the recoveries made by the applicant from their employees does not fall under the definition of supply under Section 7,” the Bench further observed.
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