Employment-related subsidized canteen supply is not a taxable service when it forms part of workers' wages and industrial obligation.

Subsidized food supplied by an employer to workers as part of the employment package and industrial obligation does not satisfy the statutory ingredients of "service" under Section 65B(44) of the Finance Act, 1994, because it is not an independent activity rendered for consideration in the relevant sense. The arrangement was treated as employment-related, with the food value regarded as wages under the Industrial Disputes Act, 1947, rather than a separate taxable service. The demand was therefore unsustainable, and the supply could not be taxed merely because it occurred outside the registered premises or raised exemption-notification issues.

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Issues: Whether the subsidized supply of food by an employer to its workers constitutes a taxable service under the Finance Act, 1994.

Analysis: The expression "service" under Section 65B(44) requires an activity carried out by a person for another for consideration, and specifically excludes a provision of service by an employee to the employer in the course of employment. The supply of food to workers at a subsidized rate was treated as part of the employment package and an industrial obligation, rather than an independent commercial service. The Court also noted that the value of such subsidized food is treated as wages under Section 2(rr) of the Industrial Disputes Act, 1947, and that the same supply had been treated as a sale for VAT purposes by the State authorities. In that setting, the activity could not be simultaneously characterised as a taxable service merely because it was provided outside the registered premises or because exemption notification issues were invoked.

Conclusion: The subsidized supply of food to workers is not a taxable service under the Finance Act, 1994, and the demand could not be sustained.

Ratio Decidendi: A subsidized supply made by an employer to its workers as part of the employment package and industrial obligation does not satisfy the statutory ingredients of "service" under Section 65B(44) of the Finance Act, 1994.

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