The Gujarat Authority for Advance Ruling (AAR) has ruled that amounts recovered by Torrent Pharmaceuticals from employees towards the cost of canteen meals are not liable to GST, as the recoveries do not constitute a ‘supply’ under the CGST Act.
The ruling relates to canteen facilities provided at Torrent’s manufacturing plant at Indrad, its R&D facility at Bhat in Ahmedabad and its corporate office at Torrent House. The company has more than 250 employees at the plant and R&D facility, while its corporate office has more than 100 employees.
Torrent told the AAR that providing canteen facilities was a statutory requirement. The company cited Section 46 of the Factories Act, 1948 for its plant and R&D facility, which requires factories employing more than 250 workers to provide and maintain a canteen. For the corporate office, the company relied on Section 23 of the Gujarat Shops and Establishments Act, 2019, which applies to establishments with 100 or more employees.
Under its canteen policy, the cost of meals is shared between Torrent and employees. At the plant and R&D facility, the company subsidises 50 per cent of the cost of breakfast, meals and snacks, while the remaining amount is recovered from employees through salary deductions. At the corporate office, the subsidy varies according to employee pay grades.
The canteen service provider raises invoices on Torrent and charges 5 per cent GST. Torrent does not earn any profit on the amount recovered from employees.
The AAR examined whether the employee deductions could be treated as consideration for a supply by Torrent. It concluded that the recoveries did not amount to a supply under Section 7 of the CGST Act.
The authority also held that Torrent could claim input tax credit on the GST charged by the canteen service provider, given the statutory requirement to provide the facilities. However, such credit would be restricted to the cost actually borne by Torrent.
The ruling was issued by SGST Member Sushma Verma and CGST Member Vishal Malani under Advance Ruling No. GUJ/GAAR/R/2026/36.
