Order Date – 21 March 2023 

Facts – 

• The Applicant, M/s Brandix Apparel India Private Limited, is engaged the business of manufacture of apparels and export of the same outside India. 
• The applicant has hired a third-party contractor for providing canteen services to the employees in the factory and hired a contractor for providing transportation services to the employees. A portion of the said expenses are recovered from employees and remaining is borne by the applicant.  

Issue – 

• Whether GST would be applicable on the amount recovered from employees for canteen facility and transportation facility? 

Order – 

• The AAR observed that the provision of canteen facility by the applicant to the employees is not a supply as it is not in the course or furtherance of business. Further, the applicant is merely collecting a part of the canteen expenses from the employee, and this does not tantamount to supply as per Section 7 of the CGST and SGST Act. 
• Further as per the Circular 172/04/2022 dated 6th July 2022 the perquisites provided by the employer to the employee will not be subjected to GST. As provision of canteen facility is a mandate as per Factories Act, 1948, it was held that the applicant is not liable to pay GST on the recoveries from the employees for the canteen services provided to them. 
• The transportation services are not a supply for the applicant made in the course or furtherance of business and the recoveries made by the applicant from their employees does not fall under the definition of supply under Section 7. 
• Further, the transportation services are being supplies by the third-party to the applicant and they are receiver and not supplier of the same. Therefore, it was held that the GST is not applicable for the recoveries from the employees for the transportation services provided to them.