No Supply on Salary deductions for Canteen Services & ITC available if Obligatory

Last updated: 27 September 2024

Save Share

Quick Summary

The Gujarat Authority for Advance Ruling (AAR) has determined that deductions from employee salaries for canteen food are not considered a 'supply' under GST law. This means no GST is applicable on these deductions. Furthermore, employers who are legally obligated to provide canteen facilities under the Factories Act can claim Input Tax Credit (ITC) on GST paid to canteen service providers, but only up to the cost they bear themselves.

Court :
Gujarat AAR

Brief :
The Gujarat AAR, in the case of M/s Allemia India Private Limited, In Re [Ruling No. GUJ/GAAR/R/2024/17 dated. July 02, 2024] ruled that the deduction made by the Applicant from employees' salaries for food provided at the factory premises does not qualify as a "supply" under Section 7 of the Central Goods and Services Tax Act, 2017 ("the CGST Act") and Gujarat Goods and Services Tax Act, 2017("the GGST Act"). Further, the Applicant is entitled to Input Tax Credit ("ITC") on GST charged by the canteen service provider ("CSP"), in accordance with Section 17(5)(b) (amended from February 1, 2019) and CBIC Circular No. 172/04/2022-GST dated July 6, 2022, read with Section 46 of the Factories Act, 1948 and Gujarat Factories Rules, 1963. However, ITC is restricted to the cost borne by the Applicant, excluding the proportionate credit embedded in amounts recovered from employees.

Citation :
Ruling No. GUJ/GAAR/R/2024/17 dated. July 02, 2024

Daily Limit Reached

You have reached your daily limit of 2 Free Judgements

Subscribe to CCI PRO for unlimited access

Why Upgrade to CCI PRO?

No Ads
WhatsApp Community
Daily E-Newsletter
Unlimited Judgements Access
Profile Visitors
Link Social Profiles
Featured Job Posts
Pro Badge
Expert GST Guidance
Unlimited Forum Replies
Download Content in PDF

1 Year PLAN - Rs.~~1999~~

1799

(Excl. of GST ₹323)

2 Years PLAN - Rs.~~3499~~

3149

(Excl. of GST ₹566)

BEST VALUE

3 Years PLAN - Rs.~~4999~~

4499

(Excl. of GST ₹809)

View all CCI PRO benefits

Already a PRO member? Login here for an ad-free experience. 07941056694

Attached File : 671907_5747_allemia_india_private_limited.pdf

downloaded 236 times

193 Views Comment Share GST Report

Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

View Judgements

Comments