Facts of the Case
The applicant was engaged in the business of manufacture of apparels and it hired a third-party contractor for providing canteen services & transportation to employees in factory. It filed an application for advance ruling to determine whether GST would be applicable on "amount recovered from employees for canteen & transportation facility provided to them".
AAR Held
The Authority for Advance Ruling observed that the applicant was involved in supply of manufacture of apparel and not in activity of provision of canteen service. In the instant case, the canteen service would not be an output service of applicant as canteen services would be received by applicant from third-party providers. Therefore, it can be concluded that provision of canteen facility by applicant to employees would not be a supply as it shall not be in course or furtherance of business.
Further, the applicant would be merely collecting a part of canteen expenses from employee and thus it would not tantamount to supply as per Section 7 of CGST Act, 2017.
The submissions made by the Applicant in respect of canteen recovery equally applies so far as the bus transportation Is concerned. It was further held the transportation services are being supplied by the third-party to the applicant and they are receiver and not supplier of the same. Therefore, it can be concluded that the GST is not applicable for the recoveries from the employees for the transportation services provided to them.
Hence, it was held that applicant would not be liable to pay GST on recoveries from employees for canteen & transportation services provided to them.
