In In re Torrent Pharmaceuticals Ltd., GUJ/GAAR/R/2026/36, the Gujarat Authority for Advance Ruling (AAR) held that GST was not payable on the amounts Torrent recovered from employees for canteen meals at its specified Gujarat facilities. The AAR treated those deductions as not being a “supply” under section 7 of the CGST Act, 2017. It answered a separate input tax credit (ITC) question differently: Torrent could claim credit only for the provider’s GST attributable to canteen costs borne by the company, not the part recovered from employees. The reproduced order and a contemporaneous legal-news report describe the decision.
What the Gujarat AAR decided
The AAR’s ruling concerns the arrangement Torrent Pharmaceuticals described for its Indrad plant, R&D facility in Bhat, Ahmedabad, and corporate office in Ahmedabad. It held that deductions from employees using those canteens were not a supply under section 7 of the CGST Act, so Torrent did not have to discharge GST on the recovered amounts. The order states: “No. GST is not liable to be discharged on the portion of amount recovered by the applicant from its employees towards the canteen facilities provided to the employees at the Indrad plant, R & D unit and corporate office as it would not be considered as a ‘supply’ under the provisions of Section 7 of the CGST Act, 2017.”
This is an advance ruling on Torrent’s record, not a blanket exemption for every employer’s canteen arrangement. Section 103, as recited in the order, makes an advance ruling binding only on the applicant and the concerned or jurisdictional officer in respect of that applicant.
How Torrent’s canteen arrangement worked
The facts set out in the ruling help explain its scope. Torrent reported more than 250 employees at both the Indrad plant and the Bhat R&D facility, and relied on section 46 of the Factories Act, 1948 for the canteens there. It reported more than 100 employees at Torrent House, its corporate office, and relied on section 23 of the Gujarat Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2019.
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Under the canteen policy dated 1 April 2025, employees at the plant and R&D facility paid 50% of meal cost, with Torrent bearing the balance. At the corporate office, the subsidy varied by grade. The canteen provider invoiced Torrent and charged GST at 5%; Torrent said it retained no profit margin from employee recoveries. Those headcounts, rates and policy details are facts of this case, not general rules or nationwide figures. The reproduced order sets out the arrangement.
Why employee deductions were not treated as a supply
The AAR considered section 7 of the CGST Act alongside the statutory canteen requirements, Torrent’s policy and provider agreement, and CBIC Circular No. 172/04/2022-GST, dated 6 July 2022. On those facts, it concluded that the amounts deducted from employees who availed the meals did not constitute a supply by Torrent. The legal-news account also summarized the result as no GST on the employee recoveries. Read the report.
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The conclusion is tied to the described arrangement. It should not automatically be extended to meals sold to the public or other third parties, contract workers, or an arrangement where the employer charges differently or operates a materially different service. The ruling does not establish the outcome for those variations.
Why the ITC result is different
GST on an employee recovery and ITC on the provider’s invoice are separate questions. Applying section 17(5)(b) and the circular’s clarification concerning the statutory proviso for services an employer must provide under law, the AAR allowed Torrent credit for provider GST only to the extent of the canteen cost borne by Torrent. It denied credit corresponding to the amounts recovered from employees. A finding of no output GST on employee deductions therefore did not make all the GST charged by the provider creditable. The reproduced order.
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How this ruling fits earlier Gujarat canteen decisions
The Torrent decision sits alongside earlier Gujarat advance-ruling material on employee canteen recoveries, but those decisions do not expand its binding effect. The Gujarat Commercial Tax Department’s February 2024 summary of the Suzuki Motor Gujarat ruling reports no GST on amounts recovered from permanent employees and discusses ITC under section 17(5)(b), the Factories Act, Gujarat Factory Rules and Circular 172/04/2022-GST. Department summary.
The department’s April 2023 summary of AIA Engineering likewise says the employee portion collected and paid to the provider was not a supply, while describing ITC as available only for employer-borne cost. Department summary. An official Gujarat AAAR Tata Motors order recounts an earlier AAR conclusion on employee collections and treats ITC as a distinct issue. AAAR order. The Torrent order itself says rulings in other applicants’ cases do not bind its AAR.
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What employers should compare before applying the result
An employer considering whether the Torrent ruling is relevant should compare its own facts rather than relying on the headline alone:
- Who receives the meal: Torrent’s ruling addressed its employees. It does not establish treatment for contract workers, third parties or other recipients.
- Whether the canteen is legally required: Torrent relied on statutory obligations for the facilities in question. Whether a comparable requirement applies depends on the establishment and applicable law.
- How the recovery works: The ruling considered Torrent’s policy, provider arrangement, employee contribution and stated absence of a profit margin. Material differences may matter.
- How costs are split: Keep the employee-recovery portion distinct from the employer-borne portion when considering ITC.
- Which GST question is being asked: Whether GST is due on a recovery is not the same as whether GST on a provider invoice can be claimed as ITC.
The AAR’s conclusion is specific to the record it considered. Employers should assess their own facts and applicable provisions rather than treating the decision as a universal rule.
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Source and scope
The detailed Torrent order text is available as a legal publisher’s reproduction, corroborated by a separate contemporaneous legal-news account; an official-hosted copy was not verified for this article. Order reproduction · News report. Anyone relying on the decision for formal advice or quoting it as an official order should check the original order.
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