2018 (10) TMI 1313 – AUTHORITY FOR ADVANCE RULING, KERALA – 2018 (18) G. S. T. L. 373 (App. A. A. R. – GST) – Levy of GST – providing canteen services exclusively for their employees – Supply of services or not – scope of “supply” and “consideration” – Held that:- The appellant company has admitted that they are serving food to the employees for cash, though there is no profit involved in the transaction. In spite of the absence of any profit, the activity of supplying food and charging price for the same from the employees would surely come within the definition of “supply” as provided in Section 7(1)(a) of the GST Act, 2017. Consequently, the appellant would definitely come under the definition of “supplier” as provided in subsection (105) of Section 2 of the GST Act, 2017.
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Moreover, since the appellant recovers the cost of food items from their employees, there is “consideration” as defined in Section 2(31) of the GST Act, 2017.
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Ruling:- The supply of food items to the
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the definition of outward supplies and are taxable under Goods & Services Tax Act. 2. The applicant is a Private Limited Company engaged in the manufacture and sale of foot wear. It was submitted that they are providing canteen services exclusively for their employees. They incur the canteen running expenses for a month and recover the same from their employees without any profit margin on the same. 3. The applicant has further submitted that the service provided to the employee is not being carried out as a business activity and it is according to the provisions in the Factories Act, 1948. As per Section 46 of the said Act, any factory employing more than 250 workers is required to provide canteen facility to its employees. The applicant detailed activity as follows:- a) The space for the canteen is provided by the Company, inside the factory premises. b) The cook is employed by the Company and is paid monthly salary. c) The vegetables and other items required for preparing the fo
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thout making any profit. 5. The company also referred to the erstwhile Service Tax 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 under the Service Tax Law. 6. The Authority for Advance Ruling had deliberated on the issue raised and after hearing the authorized representative of the applicant elaborated as follows; "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 for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment
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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." 7. The Advance Ruling authority also clarified that "It is true that in the pre-GST period, vide sl.No.19 and 19A of Notification No. 25/2012-ST dated 20.06.2012 as amended by the Notification No. 14/2013-Service Tax dated 22.10.2013 the 'services provided in relation to serving of food or beverages by a canteen maintained in a factory covered under the Factories Act, 1948 (63 of 1948), having the facility of air-conditioning or central air-heating at any time during the yea
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oyment is neither a supply of goods, nor a supply of services and that any consideration received by the employee from his employer for the services rendered in relation to the employment is outside the purview of GST. A press release dated 10.07.2017 issued by the Central Board of Indirect Taxes and Customs (CBIC) was also submitted. 11. The party also produced a copy of the press release issued by the CBEC to clarify the applicability of Reverse Charge under section 9(4) of the GST Act, 2017 on the purchase of ornaments by a jeweller from a consumer. It reads as follows: "Even though the sale of gold by an individual is for a consideration, it cannot be said to be in the course of or in furtherance of his business (as selling old gold jewellery is not the business of the said individual), and hence does not qualify to be a supply perse. Accordingly, the sale of old jewellery by an individual to a jeweller will not attract the provisions of section 9(4) and the jeweller will not
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limited company manufacturing foot wears. As per the requirement of Factories Act, for an industry having more than 250 employees, canteen facility shall be provided. To comply with the statutory requirements, the company provides food to the employees and cash is recovered from their salary. The authority below classified it as supply in furtherance of business. The Telengana High Court had delivered a judgement in favour of M/s. Bhima case stating that subsidized food to employees and realization of cost of wages is an industrial obligation it does not amount to service. Government of India issued a press release on 10-07-2017, stating that supply by employer to employee is in the course of furtherance of employment and not in the course of furtherance of business and comes under Schedule III, which is not liable to tax." 14. The contentions raised by the appellant have been examined in detail. The crucial aspects to be considered in this case are the elements of "supply&q
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the said Order held that "the petitioner has paid the value added tax on the value of the food supplied to its workers. In respect of some assessment years, they have even been imposed with a penalty under the Andhra Pradesh Value Added Tax Act, 2005. Therefore, once the State Authorities have treated the supply of food to the workers of the petitioner as sale, it is not open to the respondents to treat the same as service and impose a liability. " 16. It is apparent from the extract supra that, in the above referred case, the food provided to the employees was already taxed under the erstwhile Value Added Tax and thereby the Hon'ble High Court held that the same could not be subjected to Service Tax. Hence the Hon'ble Court had decided upon a matter where the issue of double taxation was a relevant fact. As there is no possibility of such double taxation in the GST regime, it is evident that the facts of the Bhimas Hotels case cannot be considered to be in pari-mate
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