AAR: GST Levy on the Particular Deduction for Canteen Facilities from Salary

The Authority for Advance Ruling (AAR) Karnataka stated that the GST (Goods and Services Tax) is subject to be applied to the deduction for canteen facility getting from the employees’ salary.

The petitioner Federal-Mogul Goetze India Limited was engaged in the manufacturing of automobile parts and had furnished the canteen facility to its employees through the assistance of Mithra Priya Enterprises. The meal cost furnished was deducted via the petitioner from the employee’s salary. The petitioner seeks the advance ruling if the GST is subjected to be applied on the deduction incurred on the employee’s salary, it is the supply amount under Section 7 of the CGST Act 2017.

Neethu James submitted on the grounds of the petitioner that the canteen was made as the obligatory provision without legal purpose to make the contractual relationship and hence does not build the supply. She then said about the R.J Tolsama vs Inspector, which specified that the purpose to make the contract with the employees was the normal need to form the supply does not encounter and that no GST is to be levied.

Read Also: AAR (Authority for Advance Rulings) Under GST with Mechanism

The heads of MP Ravi Prasad (state Member) and Kiran Reddy T (Central Member) encountered, furnishing the utility of the canteen to the employee was the legal need of the petitioner and were not pose a choice to the petitioner and the contractual relationship between the employees also the petitioner was made by the council since the price of the meal was formerly decided and levied. Authority sees that the utility of the canteen would support the progress of the company via saving the meal time to employees.

Under Section 7 of CGST Act 2017, the authority held, the subsidized deduction incur via the petitioner on the utility of the canteen is acknowledged as the supply and a GST is subjected to be applied.