Supply under GST— Section 7 of CGST Act— In the instant case, the applicant is engaged in manufacture, supply and distribution of various pharmaceutical products. 

The applicant has arranged a canteen facility for its employees, which is run by a Canteen Service Provider. As per their arrangement, part of the Canteen charges is borne by M/s Zydus whereas the remaining part is borne by its employees. The said employees' portion canteen charges is collected by M/s Zydus and paid to the Canteen Service Provider. M/s Zydus submitted that it does not retain with itself any profit margin in this activity of collecting employees' portion of canteen charges.

Question on which Advance Ruling sought:

Whether the subsidized deduction made by the Applicant from the employees who are availing food in the factory/corporate office would be considered as a supply by the Applicant under the provisions of section 7 of Central Goods and Service Tax Act, 2017 and Gujarat Goods and Service Tax Act, 2017.-

a. In case answer to above is yes, whether GST is applicable on the amount deducted from the salaries of its employees ?

b. In case answer to above is no; GST is applicable on which portion i.e. amount paid by the Applicant to the Canteen Service Provider or only on the amount recovered from the employees?

As clarification issued vide Circular No. 172/04/2022-GST dated 06-07-22. the provision of the services of transportation and canteen facility cannot be considered as supply of goods or services and hence cannot be subjected to GST.

Held that— Subsidized deduction made by the Applicant from the employees who are availing food in the factory/corporate office would NOT be considered a supply under the provisions of section 7 of Central Goods and Service Tax Act, 2017 and Gujarat Goods and Service Tax Act, 2017.