The Gujarat Authority for Advance Ruling (AAR) has held that no Goods and Service Tax (GST) would be applicable upon the amount of portion of canteen charges which was recovered from employees.
The applicant, AIA Engineering Limited, was engaged in the manufacturing of high chrome grinding media balls and parts of machinery for grinding and crushing. The applicant employed more than 250 employees and provided a canteen facility to its employees at their Moraiya Sanand factory. The applicant had arranged canteen service providers on a contract basis.
The CSP raises invoices along with applicable GST for its canteen services. The invoices were based on consumption, tracked on the biometric punching by the employees, and availing the canteen facility. Further, it was the applicant’s contention that the amount collected from the employees was without any commercial objective, without profit margin and was credited to the expense account while the applicant treats the canteen expense by booking it as an expense in their P&L account.
The applicant had filed this application for the advance ruling to ascertain the GST implication on the existing arrangement of canteen facilities being provided to the employees at the factory.
The Bench of Milind Kavatkar (State Goods and Service Tax) and Amit Kumar Misra (Central Goods and Service Tax) held that GST would not be leviable on the amount representing the employee’s portion of canteen charges recovered/collected by the applicant from its employees and paid to the canteen service provider on behalf of the employee since it would not be considered as a supply under the provisions of section 7 of the CGST Act,2017 and the GGST Act,20l7.
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