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2024 (6) TMI 224 - AAR - GSTIssues Involved: 1. GST liability on the amount recovered from employees for canteen facilities. 2. GST liability on the transportation facility provided to employees. 3. Eligibility to avail Input Tax Credit (ITC) on GST charged by the canteen service provider. Summary: Canteen Facility: The first issue is whether the deduction of a nominal amount made by the applicant from the employees who are availing food in the factory premises would be considered as a 'supply' u/s 7 of the CGST Act, 2017. The applicant provides canteen facilities as mandated by section 46 of the Factories Act, 1948, and deducts Rs. 260/- per month from employees' salaries. The ruling clarifies that perquisites provided by the employer to the employee in terms of a contractual agreement are not subjected to GST. Therefore, the deduction made by the applicant from the employees who are availing food in the factory would not be considered as a 'supply' u/s 7 of the CGST Act, 2017. Input Tax Credit (ITC): The second issue is whether ITC of GST charged by the CSP would be eligible for availment by the applicant. The applicant is mandated by section 46 of the Factories Act, 1948, to provide canteen facilities. Section 17 (5) (b) of the CGST Act, 2017, as amended on 1.2.2019, allows ITC for goods or services which are obligatory for an employer to provide to its employees under any law. The ruling holds that ITC will be available to the applicant in respect of food and beverages as the canteen facility is obligatory under the Factories Act, 1948. However, ITC on GST charged by the CSP will be restricted to the extent of the cost borne by the applicant only. Transportation Facility: The third issue is whether the services by way of renting/hiring of motor vehicles from the TSP is a supply of service by the applicant to its employees u/s 7 of the CGST Act, 2017. The applicant provides transportation facilities for the convenience of its employees, deducting a nominal amount of Rs. 75/- per month from the staff category. The ruling clarifies that perquisites provided by the employer to the employee in terms of a contractual agreement are not subjected to GST. Therefore, the deduction for bus transportation facility would not be considered as a 'supply' u/s 7 of the CGST Act, 2017. Ruling: 1. GST is not liable to be discharged on the portion of the amount recovered by the Applicant from its employees towards the canteen facility provided to the employees. 2. GST is not liable to be discharged on the transportation facility provided by the Applicant to its employees. 3. ITC will be available to the applicant on GST charged by the service provider in respect of canteen facilities provided to its employees other than contract employees, restricted to the extent of the cost borne by the applicant.
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