Salary Deductions for Canteen Services Not Considered Supply of Service though ITC is available as canteen services provided are obligatory in nature

Last updated: 20 June 2024

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The Gujarat Authority for Advance Ruling (AAR) has ruled that nominal deductions from employee salaries for canteen services are not considered a supply under GST. This is because such services are often obligatory for employers under laws like the Factories Act. Consequently, employers can claim Input Tax Credit (ITC) on the GST paid for these canteen services.

Court :
AAR, Gujarat

Brief :
The AAR, Gujarat in the case of M/s. Dormer Tools India Pvt Ltd [Advance Ruling no. GUJ/GAAR/R/2024/12 dated May 30, 2024], ruled that the nominal amount deducted by the Applicant from employee salary would not be considered as supply of services as per Section 7 of the Central Goods and Services Tax Act, 2017 ("the CGST Act"). The AAR, Gujarat further ruled that ITC would be available to the Appellant as per proviso to Section 17(5)(b) of the CGST Act, wherein the canteen service provided by the Applicant is obligatory in nature.

Citation :
dvance Ruling no. GUJ/GAAR/R/2024/12 dated May 30, 2024

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1999

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3499

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4999

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Attached File : 671907_5698_dormer_tools_india_p_ltd.pdf

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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