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of <h1>Employee Canteen Charges Recovery Under Factories Act Not Taxable as 'Outward Supply' Under GST</h1> <h3>In Re: M/s. Cadmach Machinery Pvt. Ltd.,</h3> In Re: M/s. Cadmach Machinery Pvt. Ltd., - 2023 (68) G.S.T.L. 223 (A. A. R. - GST - Guj.) Issues Involved:1. Whether recovery of amount from employee for third-party canteen service under Factories Act qualifies as 'outward supply' taxable under GST.Analysis:The case involved M/s. Cadmach Machinery Co. Pvt. Ltd., engaged in manufacturing pharmaceutical machinery, providing canteen facilities through a third-party service for its employees. The employees' share of canteen charges was deducted from their salary. Cadmach collected and paid the employees' portion to the canteen service provider. The company argued that this activity did not qualify as a supply in the course of business, as it was incidental to the employment contract and not a separate business activity.The applicant sought an advance ruling on whether the recovery of the amount from employees for the canteen service, as mandated by the Factories Act, should be considered an 'outward supply' taxable under GST. During the hearing, the applicant reiterated their position, while the revenue authority did not provide any comments or attend the hearing.The Authority for Advance Ruling examined the arrangement where Cadmach bore a part of the canteen charges, with the employees covering the remaining portion. Cadmach collected and paid the employees' share to the canteen service provider without retaining any profit margin. The ruling concluded that the canteen service provided by Cadmach to its employees did not constitute an activity in the course or furtherance of business, and therefore, GST was not applicable on the amount representing the employees' portion of canteen charges collected and paid by Cadmach to the service provider.In summary, the ruling clarified that the recovery of the amount from employees for the third-party canteen service, as per the Factories Act, did not qualify as an 'outward supply' taxable under GST for Cadmach, as the canteen service provided to employees was deemed incidental to the employment contract and not a separate business activity.
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