GST on subsidised canteen recovery held taxable where employee charges form consideration for supply of service.

Recovery of subsidised canteen charges from employees constitutes consideration for a taxable supply of service under GST where the employment arrangement expressly provides for such recovery. The canteen facility, though maintained to meet the employer's statutory obligation under the Factories Act, remained an activity in furtherance of business, and food supplied for valuable consideration fell within the supply framework in Schedule II. The exemption for employee perquisites did not apply because the facility was not free of cost. The pure agent argument also failed for the third-party operated model, as the employees had not authorised the employer to act as their agent. GST was therefore payable on the recovered amount in both canteen models.

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Issues: Whether recovery of subsidised amount from employees for canteen facility amounts to supply under the GST law and whether GST is leviable on such recovery in both an in-house canteen model and a third-party operated canteen model.

Analysis: The canteen was held to be a statutory facility required under the Factories Act, 1948, but the provision of food at concessional rates was still found to be an activity in furtherance of business under the GST framework. The amounts recovered from employees were treated as consideration for supply, since the employment documents expressly provided for subsidised canteen recovery and the facility was not shown to be free of cost. The ruling applied the definition of consideration, outward supply, and the service classification in Schedule II to hold that food supplied for valuable consideration through the canteen constituted a supply of service. The clarification on employee perquisites was distinguished on the footing that GST exemption was confined to perquisites forming part of the employment contract and provided free of cost, whereas the recovered subsidised amount remained taxable. The pure agent contention for the third-party operated canteen was rejected because the employees had not authorised the applicant to act as their agent and the third-party arrangement did not alter the applicant's supply to its employees.

Conclusion: The recovery of subsidised canteen charges from employees amounts to supply and GST is payable on the amount recovered in both models.

Ratio Decidendi: Where an employer provides canteen facility to employees for a subsidised charge pursuant to an express employment arrangement, the recovered amount constitutes consideration for a taxable supply of service, even if the canteen is maintained to satisfy a statutory obligation.

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