In re Cadila Healthcare Limited. (GST AAR Gujarat)
Whether the subsidized deduction made by the Applicant from the employees who are availing food in the factory/corporate office would be considered as a supply by the Applicant under the provisions of Section 7 of Central Goods and Service Tax Act, 2017 and Gujarat Goods and Service Tax Act, 2017.
a. In case answer to above is yes, whether GST is applicable on the amount deducted from the salaries of its employees?
b. In case answer to above is no; GST is applicable on which portion i.e. amount paid by the Applicant to the Canteen Service Provider or only on the amount recovered from the employees?
Held by AAR
AAR find that M/s Cadila has arranged a canteen for its employees, which is run by a Canteen Service Provider. As per their arrangement, part of the Canteen charges is borne by M/s. Cadila whereas the remaining part is borne by its employees. The said employees’ portion canteen charges is collected by M/s. Cadila and paid to the Canteen Service Provider. M/s. Cadila submitted that it does not retain with itself any profit margin in this activity of collecting employees’ portion of canteen charges. We are not inclined to accord this canteen service facility provided by M/s Cadila to its employees to be an activity made in the course or furtherance of business to deem it a Supply by M/s Cadila to its employees.
AAR held that GST, at the hands of the M/s Cadila, is not leviable on the amount representing the employees portion of canteen charges, which is collected by M/s Cadila and paid to the Canteen service provider.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, GUJARAT
M/s. Cadila Healthcare Limited., hereinafter referred to as M/s Cadila for the sake of brevity, is engaged in manufacture, supply and distribution of various pharmaceutical products. M/s. Cadila is having 7200 (approx.) employees in their factory & corporate offices and is registered under the provisions of Section 46 of the Factories Act, 1948. As per the said provisions M/s. Cadila submits that it is mandated to provide canteen facility to its employees at the factory and provides canteen facility to its employees at the factory by appointing a Canteen Service Provider to comply with the statutory requirement laid down under the Factories Act. The summary of the type of employees and the nature of recovery of subsidized value is tabulated as follows:
