Tag: canteen recovery

AARGST Article

No Supply on Salary deductions for Canteen Services & ITC available if Obligatory

byCA Bimal Jain

The Gujarat AAR, in the case of M/s Allemia India Private Limited, ruled that the deduction made by the Applicant from employees’ salaries for food provided at the factory premises does not qualify as a “supply” under Section 7 of the CGST Act and the GGST Act. Further, the Applicant is entitled to ITC on GST charged by the canteen service provider (“CSP”), in accordance with Section 17(5)(b) (amended from February 1, 2019) and CBIC Circular No. 172/04/2022-GST dated July 6, 2022, read with Section 46 of the Factories Act, 1948 and Gujarat Factories Rules, 1963. However, ITC is restricted to the cost borne by the Applicant, excluding the proportionate credit embedded in amounts recovered from employees.

AARGST Article

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

byCA Bimal Jain

The AAR, Gujarat in the case of M/s. Dormer Tools India Pvt Ltd ruled that the nominal amount deducted by the Applicant from employee salary would not be considered as supply of services . 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.