Employees' Portion of Canteen Charges Collected by Company and Passed to Service Provider Not Subject to GST

The AAR ruled that GST is not leviable on the employees' portion of canteen charges collected by Intas Pharmaceuticals Limited from its employees and paid to the Canteen Service Provider. The Authority noted that the applicant merely collects the employees' share of canteen charges and passes it to the service provider without retaining any profit margin. The employer-employee relationship was considered essential for accessing the canteen facility, but this did not create a taxable supply when the company acted only as a conduit for transferring the employees' contribution.

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Issues:
Whether GST is leviable on the amount representing the employees' portion of canteen charges collected by the applicant from employees and paid to the Canteen Service Provider.

Analysis:
The applicant, M/s. Intas Pharmaceuticals Limited, sought an Advance Ruling on the GST applicability concerning the canteen charges collected from its employees. Intas provides a canteen facility to its employees at a concessional amount, with part of the cost borne by the employees and the rest by Intas. The applicant does not retain any profit margin from collecting the employees' portion of canteen charges.

During the personal hearing, the applicant's representative reiterated the submission, while the Revenue, represented by Shri Ashram Meena and Shri Neel Kumar, provided comments stating that the issue raised by the taxpayer should be considered in light of various rulings and facts submitted.

The Revenue highlighted that the canteen charges collection is an ongoing activity, and the employer-employee relationship is essential for availing the canteen facility. The taxpayer deducts a partial amount from employees' salaries for using the canteen facility, emphasizing the necessity of the relationship for access to the facility.

The Authority found that Intas arranges a canteen run by a service provider, with employees and Intas sharing the canteen charges. Intas collects the employees' portion and pays it to the service provider without retaining any profit margin. Consequently, the Authority ruled that GST is not leviable on the amount representing the employees' portion of canteen charges collected by Intas and paid to the Canteen Service Provider.

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