Case Law Details
In re Kohler India Corporation Pvt Ltd. (GST AAR Gujarat)
AAR concluded that the deduction made by the applicant from employees for canteen services would not be considered a ‘supply’ under Section 7 of the CGST Act, 2017. Regarding ITC, the AAR ruled that the applicant can avail ITC on GST charged by the canteen service provider for obligatory canteen services under the Factories Act, 1948. However, ITC is restricted to the extent of the cost borne by the applicant, following the amended Section 17(5)(b) and circular No. 172/04/2022-GST dated 6.7.2022
Introduction: In a recent ruling by the Authority for Advance Ruling (AAR) in the case of Kohler India Corporation Pvt Ltd., the applicability of Input Tax Credit (ITC) on Goods and Services Tax (GST) charged by a canteen service provider for obligatory canteen services under the Factories Act, 1948 was examined. The AAR clarified that while the applicant can avail ITC on the GST charged, it is restricted to the extent of the cost borne by the applicant.
Background: Kohler India Corporation Pvt Ltd., engaged in the manufacturing of plumbing products, is governed by the Factories Act, 1948, which mandates the provision of canteen facilities for a specified number of workers. To comply with this requirement, the company entered into an agreement with a canteen service provider (CSP) to provide canteen services to its employees.
Key Points from the Ruling:
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There are still so many If and Buts and this need to be further clarified. Still there is no clarity whether you can get the credit in respect of services in relation with contractual manpower ? Similarly amount recovered from employees is still being considered as supply and subject to GST collection ?