Employee welfare recoveries for canteen and transport facilities were held outside GST where the employer was not supplying those services.

An employer's recoveries from employees for canteen and transportation facilities arranged through third-party vendors were held not to constitute taxable supplies under GST. The applicant was engaged in apparel manufacture, not in supplying canteen or transport services, and the facilities were treated as employee welfare measures linked to employment, including the statutory canteen obligation under the Factories Act, 1948. Because the employer merely recovered part of the cost and was not acting in the course or furtherance of a supply business, the amounts recovered from employees were outside GST. No GST liability arose on either recovery.

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Issues: (i) Whether GST is payable on the amount recovered from employees towards canteen facility provided through a third-party service provider; (ii) Whether GST is payable on the amount recovered from employees towards transportation facility provided through a third-party service provider.

Issue (i): Whether GST is payable on the amount recovered from employees towards canteen facility provided through a third-party service provider.

Analysis: The canteen service was supplied by a third-party vendor to the applicant, while the applicant merely recovered a portion of the cost from employees. The applicant was engaged in manufacture of apparel and not in the business of providing canteen services. The facility was also connected with the statutory canteen obligation under the Factories Act, 1948. On these facts, the recovery from employees was not treated as a separate supply in the course or furtherance of business. The ruling also noted that employer-provided perquisites in relation to employment are not subjected to GST.

Conclusion: GST is not payable on the recoveries from employees towards canteen facility.

Issue (ii): Whether GST is payable on the amount recovered from employees towards transportation facility provided through a third-party service provider.

Analysis: The transportation service was likewise obtained from a third-party provider, and the applicant only recovered part of the expenditure from employees while bearing the balance itself. The applicant was not in the business of transportation, and the arrangement was treated as a facility for employees rather than an independent taxable supply by the applicant. The recovery was therefore not regarded as consideration for a supply in the course or furtherance of business.

Conclusion: GST is not payable on the recoveries from employees towards transportation facility.

Final Conclusion: Both employee recoveries were held to fall outside the applicant's taxable supply, so no GST liability arose on either canteen or transportation recoveries.

Ratio Decidendi: Where an employer merely recovers a portion of the cost of employee welfare facilities supplied by third-party vendors, and the employer is not itself engaged in supplying those services in the course or furtherance of its business, such recoveries do not constitute a taxable supply under GST.

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