TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Join Channel
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether recoveries from employees towards subsidized canteen facility are liable to GST. (ii) Whether recoveries from employees towards bus transportation facility are liable to GST. (iii) Whether notice pay recoveries from employees for not serving the full notice period are liable to GST.
Issue (i): Whether recoveries from employees towards subsidized canteen facility are liable to GST.
Analysis: The employer's provision of canteen facility through third-party vendors and recovery of a portion of the cost from employees was held to be an activity connected with and incidental to the employer's business within the meaning of the inclusive definition of business. The transaction between the employer and employees was treated as a separate supply for consideration. The exemption logic available for employee-related perquisites was confined to the concession portion only and did not extend to the recovered amount.
Conclusion: GST is payable on the recovered amount, and the issue is decided against the assessee.
Issue (ii): Whether recoveries from employees towards bus transportation facility are liable to GST.
Analysis: The transportation facility supplied by the employer to employees was held to be similarly connected with the employer's business and not a merely external, unrelated arrangement. The employer paid the vendor and recovered part of the consideration from employees, which was treated as a taxable supply from employer to employees. The concession element was not treated as taxable, but the amount actually recovered retained the character of consideration for supply.
Conclusion: GST is payable on the recovered amount, and the issue is decided against the assessee.
Issue (iii): Whether notice pay recoveries from employees for not serving the full notice period are liable to GST.
Analysis: The amount recovered as notice pay was held not to represent consideration for any service by the employer. It was treated as compensation for premature exit and not as a charge for agreeing to tolerate an act or situation. The clarification in the GST circular on notice pay recoveries was applied to conclude that such recoveries do not amount to a taxable supply.
Conclusion: GST is not payable on notice pay recoveries, and the issue is decided in favour of the assessee.
Final Conclusion: The ruling sustains GST on employee recoveries for subsidized canteen and bus transportation facilities, while excluding notice pay recoveries from GST.
Ratio Decidendi: Where an employer supplies canteen or transportation facilities to employees for a recoverable consideration, the recovered portion constitutes taxable supply in the course or furtherance of business, but notice pay recovered for premature resignation is not consideration for toleration of an act and is not taxable.
TaxTMI 
