The Karnataka Authority for Advance Ruling, in Aditya Auto Products & Engineering India Pvt. Ltd. [KAR. ADRG 25/2026 dated May 19, 2026] held that input tax credit (“ITC”) on GST charged by Canteen Service Providers (“CSPs”) engaged for operating statutory factory canteens is admissible only to the extent of cost actually borne by the employer in respect of regular employees. ITC attributable to contractual workers and to the portion of cost recovered from employees is not admissible, since the statutory mandate under Section 46 of the Factories Act, 1948 extends only to direct employees and credit cannot exceed the actual business expenditure incurred in discharge of such obligation.
