In re KSB Limited (GST AAR Maharashtra)
The application before the Authority of Advance Ruling, Maharashtra concerned the applicability of Goods and Services Tax (GST) on canteen facilities provided by KSB Limited to its employees through third-party canteen service providers. The applicant, a manufacturer of liquid handling pumps with multiple factories in Maharashtra, sought clarity on whether such canteen arrangements constitute a taxable supply under the CGST and MGST Acts, particularly where no amount, or only part of the cost, is recovered from employees.
KSB Limited submitted that providing canteen facilities is a statutory obligation under Section 46 of the Factories Act, 1948, applicable to factories employing more than 250 workers. It contended that the activity is a welfare measure and not undertaken in the course or furtherance of its business of manufacturing and selling pumps. According to the applicant, canteen services are neither its principal business nor incidental or ancillary to it, and therefore do not fall within the definition of “business” under Section 2(17) of the CGST Act. It further argued that it merely facilitates the provision of food by third-party vendors, is not the service provider, and does not earn any profit from the arrangement. Where recoveries are made from employees, these are passed on to the vendor without margin. Reliance was placed on several advance rulings and judicial decisions to support the view that such recoveries should not attract GST.
