Recovery of nominal amount from salary of employees availing canteen facility is not a supply under GST: AAR

 

–  The applicant, an employer, engaged a canteen service provider to supply food for their employees, deducting a nominal amount from the employees’ salaries for this service.

 

–  The employer sought an advance ruling to clarify whether this deduction from salaries would be considered a ‘supply’ under Section 7 of the relevant tax law.

 

–  The ruling determined that the deduction of a nominal amount from employees’ salaries would not be considered a ‘supply’ under Section 7.

 

–  As there was no ‘supply’ in this context, the question of whether Goods and Services Tax (GST) would be applicable to the deducted amount became irrelevant.

 

–  The employer can claim input tax credit on the GST paid to the canteen service provider for providing canteen facilities to permanent employees. This is applicable to the extent of the cost borne by the employer, as providing such a facility is a requirement under the Factories Act.

 

Gujarat HC – Dormer Tools India (P.) Ltd., In re [ADVANCE RULING NO. GUJ/GAAR/R/2024/12]