In Re: M/s. Caltech Polymers Pvt. Ltd.
GST
2018 (4) TMI 582 – AUTHORITY FOR ADVANCE RULING – KERALA – 2018 (12) G. S. T. L. 350 (A. A. R. – GST), [2018] 2 GSTL (AAR) 23 (AAR)
AUTHORITY FOR ADVANCE RULING – KERALA – AAR
Dated:- 26-3-2018
Application dated 30. 12. 2017 – CT/531/18-C3
GST
Senthil Nathan S, IRS Member GST and N. Thulaseedharan Pillai Member SGST
ORDER
M/s. Caltech Polymers Pvt. Ltd., Malappuram (hereinafter called the applicant or the Company) has preferred an application for Advance Ruling on whether recovery of food expenses from employees for the canteen service provided by the applicant / company comes under the definition of outward supplies and are taxable under Goods & Service Tax Act.
2. The applicant is a Private Limited Company engaged in the manufacture and sale of footwear. It is submitted that they are providing canteen services exclusively for their employees. They are incurring the canteen running expenses and are recovering the
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d is recovered from the employees, as a deduction from their monthly salary, in proportion to the foods consumed by them.
f) The company does not make any profit while recovering the cost of the food items, from the employees. Only the actual cost incurred for the food items is recovered from the employees.
4. The company is of the opinion that this activity does not fall within the scope of 'supply', as the same is not in the course or furtherance of its business. The company is only facilitating the supply of food to the employees, which is a statutory requirement, and is recovering only the actual expenditure incurred in connection with the food supply, without making any profit.
5. The company also referred to the Mega Exemption Notification No. 25/2012-ST dated 20.06.2012 issued by the Government of India whereby services in relation to supply of food or beverages by a canteen maintained in a factory covered under the Factories Act, 1948 was exempted u
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under the GST laws.
9. The term “business” is defined in Section 2(17) of the GST Act, which reads like this:-
“business” includes:- (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit:
(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);…
From the plane reading of the definition of “business”, it can be safely concluded that the supply of food by the applicant to its employees would definitely come under clause (b) of Section 2(17) as a transaction incidental or ancillary to the main business.
10. Schedule II to the GST Act describes the activities to be treated as supply of goods or supply of services. As per clause 6 of the Schedule, the following composite supply is declared as supply of service.
“supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article fo
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t;
(b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government:
Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply.
Since the applicant recovers the cost of food from its employees, there is consideration as defined in Section 2(31) of the GST Act, 2017.
12. In the light of the aforesaid circumstances, we rule as under.
RULING
It is hereby clarified that recovery of food expenses from the employees for the canteen services provided by company would come under the definition of 'outward supply' as defined in Section 2(83) of the Act, 2017, and therefore, taxable as a supply of service unde
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