GST Applicable on Student Trainees but Not on Employee Accommodation: AAR
The applicant, M/s Suzuki Motor Gujarat Pvt Ltd, is a Gujarat-based factory that manufactures passenger cars and their parts at their factory. For its employees and student trainees, the applicant offers accommodation facilities in a dormitory, which is near the factory.
The facility is only for the employees and the student trainees, and not for their family members. In return for the accommodation, the applicant charges a small amount from its employees and student trainees. The employee can submit an exit form if they do not want to use this facility. The applicant has come into an agreement with a third-party accommodation services provider (ASP), which issues monthly invoices to give to the accommodation facility and charges GST at the rate of 18% from the applicant.
Question Asked by Applicant
The applicant has sought an advance ruling, asking the following questions:
1) Whether GST is liable to be discharged on the amount recovered by the Applicant from its employees towards the accommodation facility provided to them?
2) Whether GST is liable to be discharged on the amount recovered by the Applicant from student trainees towards the accommodation facility provided to them?
3) Whether the Applicant is eligible to avail of the input tax credit of the GST charged by the third-party service provider for the accommodation facility provided to its employees.
4) Whether the Applicant is eligible to avail of the input tax credit of the GST charged by the third-party service provider for the accommodation facility provided to student trainees?
The applicant contends that the accommodation facility given to its employees does not fall under ‘supply’ and is not subject to GST. As per the applicant, the accommodation facility provided to its student trainee is considered as ‘supply‘ and the applicant is liable to discharge the GST. The applicant also claims that they are eligible to claim Input Tax Credit (ITC).
Advance Ruling
As per the Gujarat Authority for Advance Ruling (AAR):
- GST is not applicable on the recoveries made from permanent employees by the applicant for the accommodation facility, as this facility is treated as a perquisite under an employment contract.
- GST is applicable on the recoveries from student trainees for the accommodation facilities, because they are not employees, and the facility cannot be treated as a perquisite.
- The applicant is eligible to claim ITC for the GST charged by ASP for accommodation facilities provided to the permanent employees and the student trainees, but only on the cost paid by the applicant for providing accommodation facilities to its employees and not on the cost recovered from the employees.