In re Plantlipids Private Limited (GST AAR Kerala)
Goods and Services Tax (GST) Authority for Advance Ruling (AAR) in Kerala has issued a ruling concerning M/s. Plant Lipids Pvt. Ltd., a spice oleoresin manufacturer, regarding the taxability of subsidized food provided in its in-house canteen and the eligibility for Input Tax Credit (ITC) on related expenses. The AAR has clarified that GST is not chargeable on amounts recovered at subsidized rates from both regular and contract employees for canteen food provided under a statutory obligation. Furthermore, the company is eligible to claim full ITC on inward supplies used in the canteen.
Plant Lipids Pvt. Ltd. operates an in-house canteen as mandated by Section 46 of the Factories Act, 1948, due to employing over 250 workers. The company provides food at subsidized rates, collecting partial or no charges, not for profit, but as a welfare measure and statutory duty. The AAR affirmed that this activity is not considered a “supply” in the course or furtherance of business under Section 7(1)(a) of the CGST Act, 2017, when it arises from a statutory obligation or is part of the employment contract. The ruling emphasized that the Factories Act’s definition of “worker” includes contract employees, extending the statutory obligation to them. Relying on CBIC Circular No. 172/04/2022-GST dated 06.07.2022 and relevant judicial precedents (e.g., NTPC Ltd. v. Karri Pothuraju, Dattatraya Shankarrao Kharde v. Executive Engineer, Chief Gate), the AAR concluded that perquisites provided under contractual or statutory obligations, including subsidized canteen meals, are not taxable supplies.
