In re Zydus Hospira Oncology Private Limited. (GST AAR Gujarat)
M/s Zydus Hospira Oncology Private Limited, a pharmaceutical company operating in Gujarat’s Pharmez Special Economic Zone (SEZ), sought an advance ruling regarding the applicability of GST on subsidized canteen facilities provided to its employees and contractual workers. The applicant provides canteen services through a third-party Canteen Service Provider (CSP) and recovers a predetermined percentage of the meal cost from employees’ salaries and contractors’ payments for contractual workers. The applicant’s questions were: (i) whether the subsidized deduction from employees and workers constitutes a “supply” under Section 7 of the CGST Act, 2017 and GGST Act, 2017, and (ii) if so, whether GST is payable on the amount deducted or on the open market value charged by the CSP.
The applicant explained that full-time employees use an ID card to avail the facility, and the amount deducted is based on actual consumption, credited to the canteen expense account, while the full CSP invoice is recorded as expense in the profit and loss account. Contractual workers, who do not have ID cards, are issued coupons for subsidized meals, and a similar accounting treatment applies. As the applicant operates in an SEZ, the CSP charges no GST, treating the supply to the SEZ unit as zero-rated.
