AAR: No GST leviable on Amount representing Employees portion of Canteen Charges


The Gujarat Authority of Advance Ruling (AAR) ruled that no GST is levied on the amount representing employees’ portion of canteen charges.

Facts of the case:-

The Applicant, M/s Tata Motors Ltd. is recovering nominal amount on monthly basis to ensure the use of canteen facility only by authorized persons/employees and expenditure incurred towards canteen facility borne by Applicant is part and parcel of cost to the company. In a press release dated 10.07.2017 also, it was clarified that supply by the employer to an employee in terms of contractual agreement of employment (part of salary/CTC) is not subject to GST. Once an employee ceases to be in employment with Applicant, he/she is not authorized to use the canteen facility. In other words, the employer-employee relationship is a must to avail this facility. The applicant has submitted that they are not in the business of providing canteen service and hence recovery of nominal amount will not fall in the definition of supply at all.

Interpretation by law:-

A similar view is also upheld by Maharashtra AAR in the case of Jotun India (P) Ltd- 2019-TIOL-312-AAR-GST. The applicant submitted that they deducted a nominal amount from the employee’s salary for availing canteen facility.

In other words, the difference between the amount paid to the service provider and the amount recovered from employees is the cost to the company as salary cost. The applicant has sought the advance ruling on the issue of whether input tax credit (ITC) is available to Applicant on GST charged by service provider on canteen facility provided to employees working in a factory and Whether GST is applicable on the nominal amount recovered by Applicants from employees for the usage of canteen facility.


The coram of Members Arun Saxena and Arun Richard ruled that ITC on GST paid on canteen facility is blocked credit under Section 17 (5)(b)(i) of CGST Act and inadmissible to the applicant. “GST, at the hands of the applicant, is not leviable on the amount representing the employee’s portion of canteen charges, which is collected by the applicant and paid to the Canteen service provider,” the AAR said. 

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