Applicability of Service Tax on factory Canteen without facility of Air Conditioned.

[vinay wakde]

Ours is a public limited company. We have engaged a Catering Contract to supply and serve the food to the employees in our factory canteen. The canteen building/eating joint is non Air Conditioned. We understand that w.e.f. 01.04.2013 Service tax is applicable, if the place i.e. canteen/eating joint is provided with the Air condition facility.

Kindly give your views about charging the service tax by the service provider in their bills after 01.04.2013

Regards,

VINAY

AI Summary

Service tax on canteen services depends on air-conditioning and whether charges are for service or supply of goods.
Applicability of service tax on factory canteens depends on whether the contractor's activity is a composite supply inclusive of food or is invoiced separately; service tax applies to the service component while VAT applies to goods. The presence of air conditioning at the eating joint is treated as a material factor for tax treatment. Recoveries from employees for subsidised meals and employer-run canteens require separate analysis to determine whether such recoveries constitute consideration subject to service tax.