No GST on charges collected from employees for canteen services provided under contractual agreement

Last updated: 17 January 2023

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Quick Summary

The Gujarat Authority for Advance Ruling (AAR) has determined that Goods and Services Tax (GST) is not applicable to the portion of canteen charges recovered from employees, provided these services are supplied under a contractual agreement. However, GST is payable on charges collected from contractual workers for the same services. The ruling also clarified that Input Tax Credit (ITC) for GST paid on canteen services is available to employers when providing these services to their employees is a legal obligation, but not when provided to contractual workers.

Court :
AAR, Gujarat

Brief :
The AAR, Gujarat in the matter of M/s. Troikaa Pharmaceuticals Limited [Advance Ruling No. GUJ/GAAR/R/ 2022/38 dated August 10, 2022] has ruled that no Goods and Services Tax ("GST") is payable on the employees portion collected by the employer for providing canteen services as perquisites and paid to the canteen service provider in terms of contractual agreement, however, GST is payable on such portion, when provided to contractual workers. Further, held that Input Tax Credit ("ITC") of GST paid on canteen charges provided to employees is available when it is obligatory to provide that service to employees under any law, but it is not available on canteen services provided to contractual workers.

Citation :
Advance Ruling No. GUJ/GAAR/R/ 2022/38 dated August 10, 2022

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