ITC Allowed on GST for Statutory Canteen Services | AAR
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- Last Updated on 5 May, 2025
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Case Details: Amneal Pharmaceuticals (P.) Ltd., In re - [2025] 173 taxmann.com 862 (AAR-GUJARAT)
Judiciary and Counsel Details
- Kamal Shukla & P.B. Meena, Member
-
Karan Rajvir for the Petitioner.
Facts of the Case
Assessee, a registered entity engaged in the manufacture and export of pharmaceutical products, operates a factory, where it provides canteen facilities to its employees. The provision of the canteen is in compliance with the statutory mandate under Section 46 of the Factories Act, 1948 read with Rule 72 of the Gujarat Factories Rules, 1963, which requires establishments employing more than 250 workers to maintain a canteen. To fulfil this obligation, the applicant entered into an agreement with a registered canteen service provider (CSP) who prepares and serves food on the factory premises. The CSP issues GST-invoiced bills based on the quantity of food consumed. A portion of the cost is recovered from employees, while the remaining expense is borne by the applicant without any commercial intent or profit element. The applicant sought an advance ruling on the eligibility to avail input tax credit (ITC) on the GST charged by the CSP.
AAR Held
The AAR Gujarat held that the ITC will be available to the applicant in respect of food and beverages. This is because the canteen facility must be provided under the Factories Act, 1948, read with the Gujarat Factories Rules, 1963, for the employees working at the factory. The ITC on GST charged by the canteen service provider will be restricted to the extent of cost borne by the applicant only.
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