AP AAR: No GST Charges on Food and Transportation Amount by Employees

The Andhra Pradesh Authority for Advance Ruling (AAR) ruled that the money covered from employees for canteen and transportation would not be subject to the GST. The applicant is an apparel manufacturer named Brandix Apparel India Private Limited. The firm exports apparel outside India.

To provide the canteen services to the factory employees, a third-party contractor had been hired by the applicant. The contractor submitted an invoice to the firm for the canteen services and collect payment from the employees for the provision of a teen facility.

Even the applicant had employed a contractor to provide transportation services for the employees on the basis of per employee per month. In order to make sure whether the GST will be imposed on the money collected from employees for the canteen and transportation services, the applicant requested for an advance judgement.

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Rajitha B, who represented the applicant and attended on his behalf, argued that the canteen services and the manufacturing of apparel are both separate businesses. She added the canteen services were not in the category of supply. It should not be treated as goods or services.

He further argued that the amount of partial cost collected for the bus service provided to the employees was between the employer and the employee in the course of employment and would not be applicable for GST.

The authority bench comprising two judges, K. Ravi Sankar (Commissioner of State Tax) and RV Pradhamesh Bhanu (Joint Commissioner of Central Tax) decided that there will be no GST imposed on the fee collected from employees for the canteen and transportation services.

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The bench further noted that the transportation services are not a supply for the applicant provided in the course or advancement of business and that the recoveries from the employees do not meet the requirements for a supply under Section 7.