Facts: M/s. Caltech Polymers Pvt. Ltd is engaged in the manufacture and sale of foot wear. The applicant is exclusively providing canteen services to 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. 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 is aggrieved with the order of Advance Ruling vide Order No .CT/531/18-C3 vide dated March 26, 2018 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 services under GST. However to get more clarity the applicant filed an appeal to appellate authority of advance ruling for the same matter.
Issue Involved: Whether recovery of food expenses from employees for the canteen provided by company comes under the definition of outward supplies is taxable under GST Act.
Held: The Hon’ble AAAR of KERALA vide Order No. CT/7726/2018-C3 dated September 25, 2018 which states that as per Clause 6 of Schedule II of GST Act any supply, by way of or as part of any service being food or any other article for human consumption or any drink, where such supply or service is for cash, deferred payment or other valuable consideration, there is ‘supply’ as provided in Section 7(1)(a) of the GST Act, 2017. The appellant would definitely come under the definition of ‘supplier’ as provided in sub-section (105) of Section 2 of the GST Act, 2017. 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. Hence, the supply of food items to the employees for consideration in the canteen run by the appellant company would come under the definition of ‘supply’ and would be taxable under GST. Therefore, the appeal fails and stands dismissed.
Citation: http://insta.instavat.in/PDF/Kerala-Appellate-Authority-Advance_Ruling_Order-Caltech.pdf