In re Aditya Auto Products & Engineering India Pvt. Ltd. (GST AAR Karnataka)
The Karnataka Authority for Advance Ruling (AAR) examined whether M/s Aditya Auto Products & Engineering India Pvt. Ltd. was entitled to avail input tax credit (ITC) on GST charged by canteen service providers (CSPs) for catering services provided at its factory premises. The applicant manufactures and trades automotive parts, operates three manufacturing units in Karnataka, employs approximately 1,288 employees, and is registered under the Factories Act, 1948. To comply with Section 46 of the Factories Act, the applicant maintains canteen facilities through CSPs for both regular employees and contract workers.
The applicant submitted that canteen facilities are provided as a statutory requirement. For regular employees, a subsidized amount ranging from ₹2,200 to ₹2,250 per month is recovered through salary deductions, while the remaining cost is borne by the applicant. For contract workers, the applicant recovers a concessional amount from contractors through invoices on which GST is discharged at 5%. The applicant argued that the canteen facility is provided solely to comply with statutory obligations, that recoveries are only partial cost recoveries without any profit motive, and that ITC should be available in light of Section 17(5)(b) of the CGST Act and Circular No. 172/04/2022-GST dated 06.07.2022.
