2026-VIL-12-AAR
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SGST Advance Ruling Authority

GST - Supply of Canteen Services, Scope of Supply - Whether GST would be applicable on the canteen facility provided to employees – HELD - The activity of providing canteen services to employees is in connection with or incidental or ancillary to the principal business activity of the applicant and thus falls within the definition of 'business' under the CGST Act - the volume of transaction is immaterial for the purpose of coverage under ‘business’, therefore, even if supply of food is quite insignificant activity in terms of volume of transaction, still in terms of Section 2(17)(c), the activity of supply of canteen services, falls within the definition of ‘business’ - The supply of canteen services by the applicant to its employees amounts to a supply of services under the GST laws - GST is applicable on the supply of canteen services by the applicant to its employees; GST is not applicable if the applicant does not recover any amount from the employees as the entire value is considered a perquisite; and GST is applicable on the amount recovered from the employees, while the portion not recovered is exempt as a perquisite – Ordered accordingly - Whether GST would be applicable if the applicant does not recover any amount from the employees – HELD - The CBIC Circular no. 172/04/2022-GST clarified that perquisites provided by an employer to an employee in terms of a contractual agreement are in lieu of the services provided by the employee to the employer and hence not subject to GST. Therefore, if the applicant does not recover any amount from the employees, the entire value of the canteen services would be considered as a perquisite and not subject to GST - Whether GST would be applicable if the applicant recovers part or full cost from the employees – HELD - If the applicant recovers any amount from the employees, the portion recovered would be liable to GST, while the remaining portion provided as a perquisite would not be taxable.
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