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of <h1>Employer-provided canteen and transport facilities as contractual perquisites exempt from GST unless charged as business supplies</h1> <h3>In Re: M/s. Kirby Building Systems & Structures India Private Limited,</h3> In Re: M/s. Kirby Building Systems & Structures India Private Limited, - 2024 (83) G. S. T. L. 213 (A. A. R. - GST - Telangana) Issues Involved:1. GST liability on recoveries for canteen and transportation facilities provided to employees.2. Eligibility for Input Tax Credit (ITC) on GST paid for canteen and transportation facilities.Issue 1: GST Liability on Canteen and Transportation FacilitiesCanteen Services:The applicant, M/s. Kirby Building Systems & Structures India Private Limited, is mandated under Section 46 of the Factories Act, 1948, to provide canteen facilities to employees. The CBIC Circular No. 172/04/2022 clarifies that perquisites provided by the employer to employees under a contractual agreement are not subject to GST. Therefore, the canteen services provided as a perquisite under the employment contract and statutory obligation are exempt from GST. If the applicant recovers only nominal amounts and records these costs in their books, they are eligible for ITC as per the proviso to Section 17(5)(b).Transportation Services:Notification No. 12/2017 exempts transport of passengers by non-air-conditioned contract carriage. However, the applicant is not under a statutory obligation to provide these services, making the proviso to Section 17(5)(b) inapplicable for claiming ITC on transportation services. The transportation services provided are for personal use, not part of business activity, and therefore not eligible for ITC under Section 17(5)(g).Issue 2: Eligibility for Input Tax Credit (ITC)Canteen Services:As per Section 17(5)(b) of the CGST/TGST Act, 2017, ITC is available for canteen facilities if it is obligatory for the employer to provide them under the Factories Act, 1948. The CBIC Circular No. 172/04/2022 confirms that perquisites provided by the employer to employees under a contractual agreement are not subject to GST.Transportation Services:Provision of transportation services is for personal consumption of employees. As per Section 17(5)(g) of the CGST/TGST Act, 2017, ITC is not available for goods or services used for personal consumption. The transportation services provided by the applicant do not qualify as 'input service' under Section 2(60) of the CGST/TGST Act, 2017, as they are not used in the course of business.Rulings:State Member:1. Canteen services provided by the factory to its employees are exempt from GST.2. ITC is available for canteen services if costs are borne by the applicant and recorded in their books.3. Transportation services provided are exempt under Notification No. 12/2017.4. ITC is not available for transportation services as they are not obligatory and are for personal use.Central Member:1. Canteen services provided as perquisites are not subject to GST. If provided for business purposes, they are subject to GST.2. ITC is available for canteen facilities if obligatory under the Factories Act, 1948.3. Transportation services provided as perquisites are not subject to GST. If provided for business purposes, they are subject to GST.4. ITC is not available for transportation services as they are for personal consumption and not part of business activity.The Authority for Advance Ruling concurred in the ruling and discussed it independently.
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