Case Law Details
In re Shriram Pistons And Rings Limited (GST AAR Uttar Pradesh)
The ruling addresses the question of whether providing subsidized food to employees falls within the scope of supply, consideration, and GST applicability. It also examines the eligibility of input tax credit on canteen charges.
The AAR considers the arrangement made by Shriram Pistons And Rings Limited, wherein a portion of the canteen charges is borne by the company, and the remaining portion is borne by its employees. The company collects the employees’ portion and pays it to the canteen service provider. The AAR examines whether GST is applicable on the amount deducted from the employees’ salaries and the eligibility of input tax credit (ITC) on canteen charges.
The AAR refers to Schedule III of the CGST Act, which states that services provided by an employee to the employer in the course of or in relation to employment are not considered as supplies. It concludes that the subsidized deduction made by the company from the employees’ salaries for availing food in the factory/corporate office does not qualify as a supply under Section 7 of the CGST Act.
Regarding the consideration of ‘supply of service,’ the AAR determines that the subsidized deduction made from employees’ salaries cannot be considered as consideration for supply of service by the company in furtherance of its business.
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