2022 (3) TMI 1082 - AAR - GST

Levy of GST - amount representing the employees portion of canteen charges which is collected by the applicant from employees and paid to the Canteen Service Provider - HELD THAT - Intas has arranged a canteen for its employees which is run by a Canteen Service Provider. As per their arrangement part of the Canteen charges is borne by Intas whereas the remaining part is borne by its employees. The said employees portion canteen charges is collected by Intas and paid to the Canteen Service Provider. Intas submitted that it does not retain with itself any profit margin in this activity of collecting employees portion of canteen charges. GST at the hands of the Intas is not leviable on the amount representing the employees portion of canteen charges which is collected by Intas and paid to the Canteen service provider.

Summary

Issues:
Whether GST is leviable on the amount representing the employees' portion of canteen charges collected by the applicant from employees and paid to the Canteen Service Provider.

Analysis:
The applicant, M/s. Intas Pharmaceuticals Limited, sought an Advance Ruling on the GST applicability concerning the canteen charges collected from its employees. Intas provides a canteen facility to its employees at a concessional amount, with part of the cost borne by the employees and the rest by Intas. The applicant does not retain any profit margin from collecting the employees' portion of canteen charges.

During the personal hearing, the applicant's representative reiterated the submission, while the Revenue, represented by Shri Ashram Meena and Shri Neel Kumar, provided comments stating that the issue raised by the taxpayer should be considered in light of various rulings and facts submitted.

The Revenue highlighted that the canteen charges collection is an ongoing activity, and the employer-employee relationship is essential for availing the canteen facility. The taxpayer deducts a partial amount from employees' salaries for using the canteen facility, emphasizing the necessity of the relationship for access to the facility.

The Authority found that Intas arranges a canteen run by a service provider, with employees and Intas sharing the canteen charges. Intas collects the employees' portion and pays it to the service provider without retaining any profit margin. Consequently, the Authority ruled that GST is not leviable on the amount representing the employees' portion of canteen charges collected by Intas and paid to the Canteen Service Provider.