Legal Precedence In Emcure Pharmaceuticals Ltd. (AAR – MAHARASHTRA) [04-01-2022]
GST is not payable on amount recovered from employees towards canteen facility, bus transportation facility and notice pay recovery
1. Canteen and Bus Transportation Facility – Canteen and bus transportation facility provided to employees at subsidized rate and part amount recovered from salary of employees as per employment agreement. These facilities which are provided to employees comes under welfare, security and safety measure. These services are provided by third party vendors and not by applicant, which makes applicant the recipient of such service. Canteen and bus transportation facility provided is not in the course or furtherance of business and cannot be considered as a supply, also Partial amount recovered from employees is a part of amount paid to third party vendors and such amounts already suffered GST – Thus, GST is not payable on the recoveries made towards canteen and bus transportation services.
2. Notice Pay Recovery – Services by an employee to the employer in the course of his/her employment are activities which shall be treated as neither supply of goods nor supply of services. Employee opting to resign by paying notice pay recovery has acted in accordance with the contract of employment. Consideration and breach of contract are absent and question of for bearance or toleration does not arise. Thus Recovery of notice pay does not amount to supply and is not liable to GST.
GST will not be payable on amount recovered from employees towards canteen & bus transportation facility as it is provided by third party vendors. Notice pay recovery is a part of employment contract itself, thus will not be treated as supply under GST which distinguishes the same from the AAR – Gujarat vide Ruling No. GUJ/GAAR/R/51/2020 dated 30-07-2020, as earlier it stated GST will be payable on notice period recovery.
