GST not payable on employee canteen, transport, and notice pay recoveries

The ruling held that GST is not payable on recoveries made from employees for providing canteen facilities at subsidized rates, bus transportation facilities, and notice pay recoveries for not serving the full notice period. The canteen and transportation facilities were deemed not integral to the applicant's business, and notice pay recovery was considered compensation rather than a service under the CGST Act.

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Issues Involved:
1. GST applicability on recoveries made from employees for providing canteen facilities at subsidized rates.
2. GST applicability on recoveries made from employees for providing bus transportation facilities and applicability of exemption under Notification No. 12/2017 Central Tax (Rate).
3. GST applicability on notice pay recoveries from employees for not serving the full notice period.

Issue-wise Detailed Analysis:

1. GST on Canteen Facility Recoveries:
- The applicant, a pharmaceutical company, provides canteen facilities to employees as per HR policy, engaging third-party service providers who charge GST.
- The applicant contends that these recoveries do not qualify as "supply" under Section 7(1) of the CGST Act, as the canteen facility is not related to their business of manufacturing pharmaceutical products.
- The ruling held that the provision of canteen facilities is mandated by the Factories Act and is not in furtherance of the applicant's business. The applicant is not supplying canteen services but is a receiver of such services from third-party vendors.
- Since the canteen facility is not a business activity of the applicant, it does not qualify as "supply" under the CGST Act. Therefore, GST is not payable on these recoveries.

2. GST on Bus Transportation Facility Recoveries:
- The applicant provides bus transportation facilities to employees using third-party vendors and recovers a subsidized amount from employees.
- The applicant argues that this facility is not in furtherance of their business and should not be considered as "supply" under the CGST Act.
- The ruling referenced similar cases (e.g., Tata Motors Limited and North Shore Technologies Private Limited) where it was held that such facilities are not integrally connected to the business and do not qualify as "supply."
- It was concluded that arranging bus transportation for employees is not an activity in furtherance of the applicant's business. Hence, GST is not payable on these recoveries.

3. GST on Notice Pay Recoveries:
- The applicant recovers notice pay from employees who do not serve the full notice period as per the employment agreement.
- The applicant argues that notice pay recovery is not a "supply" under the CGST Act and should not attract GST, citing various judicial precedents.
- The ruling referenced the Madhya Pradesh Appellate Authority for Advance Ruling and the Madras High Court's decision in GE T&D India Ltd, which held that notice pay recovery is not a service provided by the employer but compensation for the employee's sudden exit.
- It was concluded that notice pay recovery does not qualify as "supply" under the CGST Act. Therefore, GST is not payable on these recoveries.

Order:
- GST is not payable on recoveries made from employees for providing canteen facilities at subsidized rates.
- GST is not payable on recoveries made from employees for providing bus transportation facilities.
- GST is not payable on notice pay recoveries from employees for not serving the full notice period.

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