By BW CFO World Online Bureau
The Authority of Advanced Ruling(AAR) has asked to remove GST from the nominal amount paid for canteen services.
The Gujarat Bench of the Authority of Advanced Rulings(AAR), as per a ruling by Tata Motors, has asked that no Goods and Services Tax(GST) shall be levied on the nominal amount received from the employee for the canteen services which is transferred to the third-party caterer by the company.
To cater to the needs of the employees, the company hires third-party caterers who serve meals to them. A part of the total amount is recovered from the employees and often issues relating to GST arise.
Tata Motors further explained that it was recovering the amount on a monthly basis in the way of a salary deduction to ensure that the canteen is used only by its employees.
The report mentioned that a press release issued by the Central Board of Indirect taxes and Customs (CBIC) that the supply by the employer to the employee in terms of contractual agreements of employments (part of the cost to company) is not subject to GST. As it was not a part of business, recovering this nominal amount should not constitute a ‘taxable’ supply.
The ruling would bode well for offices that intend to welcome employees back to the office post-vaccination.
While advance rulings do not set a judicial precedent, they have persuasive value in assessments. This AAR ruling is consistent with the similar stand taken by the Maharashtra AAR in another case.