No GST on Canteen Services if Amount Not Recovered from Employees: AAR

The applicant company, KSB Limited, operates its business at various locations in Maharashtra. The applicant provides canteen facilities to its employees as required under section 46 of the Factories Act, 1948. To provide the canteen facilities, the applicant has hired a canteen service provider or a vendor who manages the canteen-related services. The vendor charges a fixed rate per meal per employee.

The company filed an application before the Maharashtra Authority for Advance Ruling (AAR) under section 97 of the CGST Act and Maharashtra GST Act, 2017, to get an advance ruling on the following issues:

“1. Whether GST would be applicable on canteen facility provided by a KSB Limited to its employees using a third-party canteen services provider?

2. In case GST is applicable on Canteen services provided by KSB to its employees, whether GST would be applicable if KSB Limited does not recover any amount from employee for providing canteen facility?

3. In case GST is applicable on Canteen services provided by KSB to its employees, whether GST would be applicable if KSB Limited recovers from employee’s part or whole of the cost charged by the canteen service provider to KSB?”

As per the Maharashtra AAR, GST would be applicable on the canteen services provided by the company to its employees, as the same is treated as a supply of services under the MGST Act, 2017.

The authority clarified that the GST is applicable only on the amount received from the employees for the canteen services. However, if the company does not recover the cost of service from the employees for the canteen services, it would be treated as a perquisite, and GST will not be applicable in such a case.