The Gujarat Authority for Advance Ruling (AAR) has clarified that nominal recoveries made by Suzuki Motor Gujarat Pvt. Ltd. from its permanent employees for accommodation will not attract Goods and Services Tax (GST). However, the same relief will not extend to student trainees, for whom GST will be payable.
The bench of Vishal Malani and Sushma Vora has observed that the company can claim ITC on GST paid to ASPs for accommodation services provided to employees. However, the credit will be restricted to the portion of cost borne by Suzuki itself, excluding the amounts recovered from employees. As Suzuki is charging GST on recoveries from student trainees, the AAR permitted full ITC on the GST paid to ASPs for such services.
The applicant, Suzuki Motor Gujarat Pvt. Ltd., engaged in the manufacture of passenger vehicles and parts at its Hansalpur facility, provides optional dormitory accommodation to employees and mandatory accommodation to student trainees. The company engages third-party accommodation service providers (ASPs) for this purpose, who charge GST at 18% on their services. Suzuki recovers only a nominal portion of this cost from employees and trainees.
The company approached the AAR seeking clarity on four issues in respect of GST liability on recoveries from employees; GST liability on recoveries from student trainees; eligibility to claim Input Tax Credit (ITC) on GST paid to ASPs for employee accommodation; and eligibility to claim ITC on GST paid for student trainee accommodation.
The AAR held that accommodation provided to permanent employees constitutes a perquisite under the employment contract and does not amount to “supply” under Section 7 of the CGST Act. Accordingly, GST is not leviable on the amounts recovered from employees.
Since student trainees are not employees, the dormitory facility extended to them cannot be treated as a perquisite. The AAR ruled that the service qualifies as “supply,” making GST payable on recoveries from trainees.
The company can claim ITC on GST paid to ASPs for accommodation services provided to employees. However, the credit will be restricted to the portion of cost borne by Suzuki itself, excluding the amounts recovered from employees.
As Suzuki is charging GST on recoveries from student trainees, the AAR permitted full ITC on the GST paid to ASPs for such services.
Ruling Details
Applicant’s Name: Suzuki Motor Gujarat Pvt Ltd.
Ruling Date: 12/08/2025
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