Shivani Bhati | Nov 17, 2021 |
GST paid on canteen facility is blocked credit under Section 17 (5)(b)(i) of CGST Act; GST, at the hands on the applicant, is not leviable on the amount collected from employees’
1. Whether input tax credit (ITC) available to Applicant on GST charged by service provider on canteen facility provided to employees working in a factory?
2. Whether GST is applicable on nominal amount recovered by Applicants from employees for usage of canteen facility?
3. If ITC is available as per question no. (1) above, whether it will be restricted to the extent of cost borne by the Applicant (employer)?
Section 17(5)(b) “(b) the following supply of goods or services or both-
(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance: Provided that the input tax credit in respect of such goods or services or both shall be available where an inward supply of such goods or services or both is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply;
(ii) membership of a club, health and fitness center; and
(iii) travel benefits extended to employees on vacation such as leave or home travel concession:
Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force.”
Shri Rajesh Shukla, Head Indirect Taxation, Shri Mukesh Dokania, DGM appeared for the hearing (through virtual mode) and reiterated the contents of the application.
We have carefully considered all the submissions made by the applicant. We find that the applicant has arranged a canteen for its employees, which is run by a third party Canteen Service Provider. As per their arrangement, part of the Canteen charges is borne by the applicant whereas the remaining part is borne by its employees. The said employees’ portion canteen charges is collected by the applicant and paid to the Canteen Service Provider. The applicant submitted that it does not retain with itself any profit margin in this activity of collecting employees’ portion of canteen charges. This activity carried out by the applicant is without consideration.
ITC on GST paid on canteen facility is blocked credit under Section 17 (5)(b)(i) of CGST Act and inadmissible to applicant.
GST, at the hands on the applicant, is not leviable on the amount representing the employees’ portion of canteen charges, which is collected by the applicant and paid to the Canteen service provider.
To Read the Judgment Download PDF Given Below :
In case of any Doubt regarding Membership you can mail us at [email protected]
Join Studycafe's WhatsApp Group or Telegram Channel for Latest Updates on Government Job, Sarkari Naukri, Private Jobs, Income Tax, GST, Companies Act, Judgements and CA, CS, ICWA, and MUCH MORE!"