In re Spicer India Private Limited (Dana Anand India Pvt Ltd) (GST AAR Maharashtra)
The Maharashtra Authority for Advance Ruling (AAR) has ruled that Spicer India Private Limited (now known as Dana Anand India Pvt Ltd) is liable to pay Goods and Services Tax (GST) on the amounts recovered from its employees for providing subsidized canteen and transportation services. The company, a manufacturer of automotive components, sought clarification on the GST implications of these recoveries, which are made as a partial offset to the costs incurred for providing these facilities through third-party vendors, as mandated by the Factories Act, 1948.
The AAR determined that the amounts recovered from employees for both canteen and transportation services constitute a taxable supply under Section 7(1) of the CGST Act, 2017. It reasoned that these services are provided in the course of the company’s business, being ancillary to its primary manufacturing activity. The AAR identified two distinct supplies: one from the third-party vendor to the employer and another from the employer to the employees, with the salary deductions acting as consideration for the latter. While the portion of the cost borne by the company as a subsidy might be considered a perquisite and thus exempt under Schedule III of the CGST Act, the amount recovered from the employees is subject to GST.
