2026-VIL-73-AAR
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SGST Advance Ruling Authority

GST – Maharashtra AAR - Taxability of recoveries made from employees towards canteen facilities and transportation services provided by employer - Applicant provides canteen and transportation services to its employees. The applicant pays the entire consideration to the respective service providers and then recovers a certain portion of the cost from the employees - Whether the GST would be payable on the recoveries made from the employees towards providing canteen facility at subsidized rates and recoveries made from the employees towards providing bus transportation facility – HELD - The supply of canteen services and transportation services by the applicant to its employees would constitute a supply of services under Section 7(1) of the CGST Act, as these activities are in connection with or incidental or ancillary to the principal activity of the applicant and hence fall within the definition of 'business' under Section 2(17) of the CGST Act - The recoveries made from the employees for these services would be liable to GST, as it is a consideration received by the applicant for the supply of these services. However, the portion of the value of these services provided to the employees as 'perquisites' in terms of the contractual agreement between the employer and employee would not be subjected to GST, as it is in lieu of the services provided by the employee to the employer in the course of employment, and hence covered under Schedule III of the CGST Act - The GST would be payable on the recovered amount from the employees for the canteen and transportation services provided by the applicant, however, the portion of the value of these services provided as 'perquisites' to the employees would not be subject to GST – Ordered accordingly - Taxability of notice pay recoveries made from employees - The applicant recovers notice pay from the employees who resign without serving the full notice period as per the employment contract - Whether the GST would be payable on the notice pay recoveries made from the employees on account of not serving the full notice period – HELD - The CBIC Circular No. 178/10/2022-GST dated 3rd August 2022, clarified that the notice pay recoveries made by the employer from the employees are not taxable as the amounts are recovered not as a consideration for tolerating the act of premature quitting of employment, but as penalties to discourage non-serious candidates from taking up employment - The GST would not be payable on the notice pay recoveries made from the employees on account of not serving the full notice period.
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