Recoveries Made by Employers from their Employees for Canteen Service not Considered as Supply: AAR

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Case Details: Authority for Advance Rulings, Andhra Pradesh Brandix Apparel India (P.) Ltd., In re – [2023] 149 taxmann.com 396 (AAR-ANDHRA PRADESH)

Judiciary and Counsel Details

K. Ravi Sankar & RV Pradhamesh Bhanu, Member

Rajitha B for the Appellant.

Facts of the Case

The applicant was engaged in business of manufacture of apparels and it hired a third-party contractor for providing canteen services to employees in factory. It filed an application for advance ruling to determine whether GST would be applicable on amount recovered from employees for canteen facility provided to them.

AAR Held

The Authority for Advance Ruling observed that the applicant was involved in supply of manufacture of apparel and not in activity of provision of canteen service. In the instant case, the canteen service would not be an output service of applicant as canteen services would be received by applicant from third-party providers. Therefore, it can be concluded that provision of canteen facility by applicant to employees would not be a supply as it shall not be in course or furtherance of business.

Further, the applicant would be merely collecting a part of canteen expenses from employee and thus it would not tantamount to supply as per Section 7 of CGST Act, 2017. Hence, it was held that applicant would not be liable to pay GST on recoveries from employees for canteen services provided to them.

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