Employee canteen recovery treated as taxable supply, with GST applying to employer charges for food supplied to staff.

Recovery of a nominal canteen charge from employees was treated as consideration for a separate supply by the employer to its employees, after the third-party caterer's supply to the employer. The canteen facility was not accepted as a mere reimbursement, pass-through, or contractual perquisite covered by the CBIC circular, and the Factories Act, 1948 mandate did not create a GST exemption. Food or drink supplied for consideration was treated as a supply of service under Schedule II, so GST applied to the employee recovery and the employee's challenge failed.

---

---

Issues: Whether the nominal amount recovered by the employer from employees towards canteen food supplied in compliance with the Factories Act, 1948 is liable to GST.

Analysis: The canteen facility was held to give rise to two distinct transactions: supply by the third-party caterer to the employer, and supply by the employer to its employees. The amount recovered from employees was treated as consideration for the employer's supply of food and beverages, not as a mere reimbursement or pass-through. The canteen facility was not regarded as a contractual perquisite within the scope of the CBIC circular, and the mandate under the Factories Act, 1948 did not create any GST exemption. The supply of food or drink for consideration was held to fall within the statutory treatment of supply of service under Schedule II.

Conclusion: The recovery from employees was held to attract GST, and the appeal was rejected.

Final Conclusion: The ruling of the Advance Ruling Authority was affirmed, and the employer's challenge to GST on the employee recovery for canteen supplies failed.

---