AAR: GST exempt for employer-employee contractual perquisites

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Case Details: Authority for Advance Rulings, Gujarat AIA Engineering Ltd., In re – [2023] 150 taxmann.com 73 (AAR – GUJARAT)

Judiciary and Counsel Details

Milind Kavatkar and Amit Kumar Mishra, Member
Ms. Khusboo Kundalia, CA, Nrupesh Machchhar, CA and Anil H Shah, Manager for the Appellant.

Facts of the Case

The applicant was providing canteen facility to its employees through canteens service provider. The employees would bear 50% cost while remaining 50% would be borne by the applicant on behalf of its employees. It filed an application for advance ruling to determine whether GST to be paid on amount recovered from employees and paid to canteens service provider.

AAR Held

The Authority for Advance Ruling (AAR) noted that the applicant provided demarcated space for canteen as mandated in section 46 of Factories Act, 1948. The AAR also noted that CBIC vide Circular No. 172/04/2022-GST has clarified that perquisites provided by employer to employee in terms of contractual agreement between employer and employee will not be subjected to GST when the same are provided in terms of the contract between the employer and employee.

Therefore, it was held that the subsidized deduction made by the applicant from the employees who would be availing food in the factory would not be considered as supply under the provisions of Section 7 of the GGST Act, 2017.

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