In re Wika instrument India Pvt. Ltd. (GST AAR Maharashtra)
The present advance ruling concerns the GST treatment of nominal amounts recovered by an employer from employees for transportation and canteen facilities. The applicant, a manufacturing company, provides transportation services through non-air-conditioned buses hired from a third-party service provider and also offers canteen facilities as mandated under the Factories Act, 1948. A fixed nominal amount of ₹400 per month is recovered from employees for each facility.
The primary issue before the Authority for Advance Ruling (AAR) was whether such recoveries constitute “supply” under Section 7 of the CGST Act, 2017, and whether GST is applicable on these transactions.
The AAR examined the scope of “business” under Section 2(17) of the CGST Act, which includes activities incidental or ancillary to the principal business. Although the applicant’s main activity is manufacturing, the Authority held that providing canteen and transportation facilities supports employees and is therefore incidental to the main business. Consequently, these activities fall within the definition of “business.”
The Authority identified two separate transactions: first, the supply of services by third-party vendors to the employer, and second, the supply of those services by the employer to employees. The employer pays the full consideration to vendors and recovers a subsidized portion from employees through salary deductions. Since there is consideration involved, even if nominal, the transaction qualifies as “supply” under Section 7(1).
