The Authority for Advance Ruling (AAR), Gujarat has ruled in favour of Tata Autocomp Systems Ltd., declaring them eligible for Input Tax Credit (ITC) on the Goods and Services Tax (GST) borne by them for the in-house canteen services provided to their employees by a service provider.
The applicant, a prominent automotive parts manufacturer, had sought an advance ruling to clarify the GST implications of the food and canteen services they provide to their employees in its factory premises.
The applicant is a group entity of Tata AutoComp Systems Ltd. (TACO), engaged in the manufacture, sale and trading of automotive parts and provides products and services at the global level.
The applicant stated that they have engaged Service Providers to offer food and canteen facilities in the factory premises to their 322 employees, apart from contract employees, in adherence to the Factories Act, 1948. The canteen facility was provided to the employees at a very nominal and nominal rate and employees were required to display their company-issued employee IDs to avail the canteen services.
The applicant, represented by Suyash Maheshwari, Vikash Agarwal and Manish Kumar Mishra contended that the food and canteen facility provided to their employees should not be considered a Supply under GST as it is extended in compliance with a statutory obligation under the Factories Act, 1948 and in the course of the employees’ employment.
The applicant highlighted that no GST should be levied from them since the recovery made from employees for the canteen service was ultimately paid to the canteen service provider reinforcing the absence of any quid pro quo or intention to undertake a business activity.
The Authority comprising Milind Kavatkar, State Goods and Services Tax (SGST) Member and Amit Kumar Mishra, Central Goods and Services Tax (CGST) Member ruled that food and canteen services provided by the employer to its employees in the factory premises of the employer would not be considered a supply of service under the provisions of Section 7 of CGST and SGST Acts.
Consequently, the applicant is eligible to avail ITC on the GST charged by the Service Provider for providing catering services to the employees, the authority held.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
