NO GST IS LEVIABLE ON EMPLOYEES PORTION OF CANTEEN CHARGES COLLECTED BY COMPANY. ADVANCE RULING NO. GUJ/GAAR/R/2022/01

Facts of the Case: –

• The Company is providing canteen facility for its workers and staff.
• The Company submitted that it has more than 250 workers/employees and are required to maintain the Canteen as per Factories Act, 1948.
• The Company takes Canteen Services and agreed to pay fix sum, per plate amount as per agreement.
• The Company collects some portion of the total amount of food price to be paid to the Canteen Service provider from its employees, without making any profit.
• The Company is not taking any ITC on the services received from the Canteen Service provider.

Questions sought in Advance ruling:

• Whether GST is applicable on the amount representing the employee’s portion of canteen charges, which is collected by the Company and paid to the Canteen service provider?
• If ITC is available, whether it will be restricted, to the extent of cost borne, by the Company?

Observations and Findings:

In the instant case, the canteen facility is provided to the employees, by the canteen service provider, at the premises of the Company. The cost of the canteen service is borne by the Company and the employees (who bears half of the cost). Further the assessee does not retain any profit margin on the said activity.

Ruling:

GST is not leviable on the amount representing the employees’ portion of canteen charges, which is collected by the Company and paid to the Canteen service provider.

Nakul Sharma, Audit Associate, SW India