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No GST on charges collected from employees for canteen services provided.

Rajeev Jain
GST Not Applicable on Canteen Charges for Employees, Applies to Contractual Workers; Input Tax Credit Claimed for Employees Only. The Authority for Advance Rulings in Gujarat determined that Goods and Services Tax (GST) is not applicable on canteen charges collected from employees by employers when these charges are paid to the canteen service provider, as this is part of a contractual agreement. However, GST applies to amounts collected from contractual workers, as they do not have an employer-employee relationship with the employer. Employers can claim input tax credit on GST paid for canteen services provided to employees, but not for services to contractual workers, as there is no legal obligation to provide such facilities to them. (AI Summary)

It has been held by the Authority for Advance Rulings, Gujarat on the application filed by IN RE: M/S. TROIKAA PHARMACEUTICALS LIMITED - 2022 (9) TMI 200 - AUTHORITY FOR ADVANCE RULING, GUJARAT -  

  • GST is not payable on employees' portion of canteen charges collected by employer and paid to canteen service provider as canteen service is provided as per contractual agreement.
  • Amount collected from contractual workers and paid to canteen service provider is subject to levy of GST as employer and contractual workers do not fall under ambit of employer-employee relationship.
  • Input tax credit of GST paid on canteen charges is available as employer is under obligation to provide such facility as per Factories Act.
  • Input tax credit of GST paid on canteen services provided to contractual worker cannot be availed as employer/applicant and such workers will not fall under ambit of employer-employee relationship and employer is not under legal obligation to provide such facility to such workers.

Itwas also held by the Authority for Advance Rulings, Gujarat on the application filed by IN RE: M/S. CADILA HEALTHCARE LIMITED - 2022 (4) TMI 1339 - AUTHORITY FOR ADVANCE RULING, GUJARAT 

  • Part of Canteen charges is borne by applicant whereas re-maining part is borne by its employees - Said employees' portion canteen charges is collected by applicant and is paid to Canteen Service Provider, without making any profit.  Under these circumstances, GST is not leviable on activity of collection of employees' portion of amount by appellant, there being no supply of goods or service by appellant to its employees.
Goods and Services Tax - GST
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