SEZ Canteen Charge Recovery Not Taxable Under GST | AAR

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  • Last Updated on 9 January, 2026

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GST on SEZ Canteen Charges AAR

Case Details: Zydus Hospira Oncology (P.) Ltd., In re [2025] 181 taxmann.com 643 (AAR - GUJARAT)

Judiciary and Counsel Details

  • Sushma Vora & Vishal Malani, Member
  • Hiren Pathak, Authorised Signatory for the Applicant.

Facts of the Case

The applicant sought clarification regarding the applicability of GST on recoveries of employees’ share of canteen charges. It was submitted that it was an SEZ pharmaceutical unit mandated under the Factories Act, 1948 to provide a canteen facility for its employees. It recovered a fixed portion of the meal cost from employees through salary deductions, while the remaining cost was borne by the applicant as part of staff welfare. It was contended that such recoveries were employee perquisites and did not constitute a supply under GST. The matter was accordingly placed before the Authority for Advance Ruling (AAR).

AAR Held

The AAR held that the applicant’s recovery of employees’ share of canteen charges did not constitute an outward supply under Section 7 of the CGST Act and the Gujarat GST Act. It was observed that the collection of the employees’ portion and its subsequent remittance to the canteen service provider were merely internal adjustments related to employee perquisites and were not made in the course or furtherance of the business. Applying the guidance of the CBIC Circular, it concluded that recoveries of this nature fall outside the definition of supply under Schedule III. Consequently, GST was not leviable on the employees’ share of canteen charges.

List of Cases Referred to

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied