2026-VIL-90-AAR
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SGST Advance Ruling Authority

GST – Maharashtra AAR - Recovery of amount towards Canteen facility and transportation facility provided by employer to employees - Whether the recovery of nominal amount from employees towards the cost of canteen and transportation facilities provided by the applicant amounts to 'supply' under the GST law and whether GST is applicable on such recoveries - Whether the applicant is eligible to avail ITC on the GST paid to the canteen service provider and transport service providers - HELD - The provision of canteen and transportation facilities by the applicant to its employees, though mandated under the Factories Act, 1948, would be considered as 'supply' within the meaning of Section 7(1)(a) of the CGST Act, 2017 as it is an activity or transaction in connection with or incidental or ancillary to the main business activity of the applicant. Further, the recovery of nominal amount from the employees towards the cost of such facilities would amount to 'consideration' for such supply – The supply of food or transportation services by an employer to its employees for a consideration is taxable under GST. The exemption provided under Schedule III of the CGST Act regarding 'services by an employee to the employer' does not apply to the present case as the supply is from the employer to the employee and not vice versa - However, as per the clarification provided in the CBIC Circular No. 172/04/2022-GST, the perquisites provided by the employer to the employee in terms of the employment contract are not subject to GST. Thus, the portion of the canteen and transportation facility costs borne by the applicant and provided as perquisite to the employees would not be subject to GST - The ITC on the GST paid to the canteen service provider would not be available to the applicant as the restaurant services are mandatorily chargeable at a concessional rate of 5% without ITC as per the relevant notification. However, the ITC on the GST paid to the transport service provider would be available to the applicant as the services of transportation of passengers in non-air conditioned contract carriage are not blocked under Section 17(5) of the CGST Act – Ordered accordingly
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