Recovery of amount from employee on account of third party canteen services are taxble under GST.

Last updated: 20 January 2021

Court :
Gujrat AAR

Brief :
The applicant submitted that they are a 100% EOU, carrying out canteen facilities through third party canteen service at their factory. More than 500 employees are working in the factory. The model that they have in their factory is that the food is being offered to employees on subsidized rate whereby the employee’s share of the cost is being deducted from their salary.

Citation :
ADVANCE RULING NO. GUJ/GAAR/R/50/2020

GUJARAT AUTHORITY FOR ADVANCE RULING,
GOODS AND SERVICES TAX,
A/5, RAJYA KAR BHAVAN, ASHRAM ROAD, AHMEDABAD – 380 009.

ADVANCE RULING NO. GUJ/GAAR/R/50/2020
(IN APPLICATION NO. Advance Ruling/SGST&CGST/2019/AR/12)
Date: 30.07.2020

Name and address of the applicant : M/s Amneal Pharmaceuticals Pvt. Ltd.,
882/1-871, Ground Floor, Near Hotel Karnavati, Sarkhej-Bavla Highway, Village- Rajoda Bavla, Ahmedabad
382220 (Gujarat).

GSTIN of the applicant:24AAGCA0781K1ZP

Date of application:22.02.2019

Clause(s) of Section 97(2) of CGST / GGST Act, 2017, under which the question(s) raised. : (g) Whether any particular thing done by the applicant with respect to any goods and/or services or both amounts to or results in a supply of goods and/or services, within the meaning of that term?

Date of Personal Hearing :09.07.2020 (through Video Conferencing)

Present for the applicant:Shri Satyajit. D. Naik

B R I E F FA C T S

The applicant submitted that they are a 100% EOU, carrying out canteen facilities through third party canteen service at their factory. More than 500 employees are working in the factory. The model that they have in their factory is that the food is being offered to employees on subsidized rate whereby the employee’s share of the cost is being deducted from their salary.

2. The applicant further submitted that in short, they are collecting and paying the portion of the employee to third party (i.e. Canteen service Provider). Hence, this is not their main object of business. This is nothing but the facility provided to employee without making any profit and working as a mediator between employee and contractor of canteen service provider. Therefore, in their view, no GST shall be payable by employee to company on the subsidized value of food.

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