TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether canteen services supplied by the applicant to its employees through a third-party canteen service provider constitute supply of services and are taxable under GST. (ii) Whether the tax position changes where no amount is recovered from employees or where part or whole of the canteen cost is recovered from employees.
Issue (i): Whether canteen services supplied by the applicant to its employees through a third-party canteen service provider constitute supply of services and are taxable under GST.
Analysis: The canteen facility was not treated as a mere welfare arrangement outside the GST net. The applicant's principal business is manufacture and sale of pumps, but the canteen facility was held to support the workforce and therefore to be connected with, incidental to, or ancillary to the business. The arrangement involved two transactions: the third-party service provider supplying canteen services to the applicant, and the applicant supplying canteen services to its employees. The employer-employee relationship and the contractual arrangement did not take the employer's onward supply outside the definition of business. The Authority also relied on the principle that perquisites provided by an employer may form part of the taxable framework when they are supplied in the course of business.
Conclusion: Yes. The canteen facility supplied by the applicant to its employees amounts to a supply of services and is taxable under GST.
Issue (ii): Whether the tax position changes where no amount is recovered from employees or where part or whole of the canteen cost is recovered from employees.
Analysis: Where no amount is recovered from employees, the value of the canteen facility was treated as a perquisite and GST was held not applicable on that component. Where any amount is recovered, the recovery represents consideration for the service supplied to employees and is liable to GST. Only the unrecovered portion remains in the nature of a perquisite. The Authority distinguished the exempt status of employee services under Schedule III from the employer's taxable supply to employees, and treated the concessional or unrecovered element as the relevant perquisite portion.
Conclusion: No GST is payable where nothing is recovered from employees, but GST is payable on the amount recovered from employees; the unrecovered portion is treated as a perquisite.
Final Conclusion: The applicant's onward supply of canteen services to employees is taxable in principle, but tax is confined to the employee-recovered amount, while the unrecovered component is treated as a perquisite and not subjected to GST.
Ratio Decidendi: An employer's provision of canteen services to employees can constitute a supply in the course of business when it is incidental or ancillary to the principal business, and GST applies to the consideration recovered from employees, while the unrecovered concessional component is treated as a perquisite.
TaxTMI 
