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15 Apr2021
  • By Admin
  • Category Goods and Service Tax
  • Views 588
"GST is not applicable on the amount recovered from the employees for canteen services."

[Citation: M/s Amneal Pharmaceuticals Private Limited, Gujarat Appellate Authority for Advance Ruling dated March 8, 2021 (GUJ/GAAR/APPEAL/2021/07)]

Facts of the case -

  • M/s Amneal Pharmaceuticals Private Limited is engaged in the manufacturing of pharmaceutical products. 
  • He had filed an application with the AAR to clarify whether GST would be leviable on mere arranging a canteen facility, i.e., provision of canteen service through a third-party vendor where Appellant recovered partial amount from employee's salary and subsequently paid to the canteen service provider. 
  • The AAR pronounced that GST would be applicable on the amount recovered from employees. Aggrieved with the ruling, the Appellant preferred an appeal before the AAAR. 

Submissions - 

  • The canteen facility is being provided in the backdrop of mandate under Section 46 of the Factories Act, 1948.
  • The applicant is merely facilitating between the employee and the canteen service provider.
  • It is collecting employee's share and paying it to the service provider.
  • It collects employee's share and delivers them to the service provider and is not covered by the scope of supply as envisaged in Section 7 of the CGST Act, 2017 and is not undertaken in the course or furtherance of business.
  • On inward supply of canteen, it has not been availing the input tax credit. 


  • The Appellate Authority observed that the applicant does not supply any goods or services to its employees against the amount collected from employees. 
  • He collects employee's share and, along with his share, transfer the amount to the service provider. 
  • He neither keeps any margin nor offering them food or canteen service to its employees. 
  • Still, it is a canteen service provider who has been providing these services. 
  • Accordingly, it concludes that the Appellant is not carrying out the said activity [i.e., collecting employee's portion of the amount and handing over it to the canteen service provider] for any consideration. 
  • Such transactions are without involving any supply from the Appellant to its employees, and therefore, GST is not leviable thereon. 

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