Caltech Polymers (P.) Ltd. – 2018 (18) G.S.T.L. 373 (App. A.A.R. – GST – Kerala)

Supply of food items to the employees for consideration in the canteen run by the employer company would constitute as ‘Supply’ 

Facts: In this case the appellant supplies of food items to the employees from canteen run by the appellant company and recover the expenses from their employees without any profit margin on the same. The applicant has submitted that the canteen 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. However to get more clarity the applicant filed an appeal to appellate authority of advance ruling for the same matter.

Issue: Whether recovery of food expenses from employees for the canteen service provided by the company comes under the definition of outward supplies and are taxable under GST Act.

Held: The AAAR Kerala in this case, 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. Also, 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.

Therefore, 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. 

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