Exemption notification 14/2013-ST is applicable if less than 250 employee is working in factory

[SACHIN PAWAR]

Sir/Madam,

My query is regarding applicability of Exemption notification 14/2013-ST dt. 22.10.13. Our factory is register under the Factories Act, 1948 and working, contractual employees are less than 200 or near about 200. As per factory act maintained a canteen facility to employees is not mandatory. But our management is providing A/C canteen facility to all employees at subsidies rates. Does exemption notification 14/2013-ST dt. 22.10.13 meant that to get exemption canteen must run as per Factories Act, 1948 in which more that 250 employees required. Can we avail exemption under this notification even though less than 250 employees are working in factory. If we carefully read notification we can derive meaning that factory should be cover as per factory act 1948 and not necessary that canteen should run as per Factories Act, 1948.

[YAGAY andSUN]

Dear Sachin,

Providing Canteen facility is statutorily required where more than 250 employees are working. This aspect has been incorporated in Section 46 of the Factory Act, 1948. This Section overlaps the Section 2(m) of the Factory Act, 1948. We understand your concerns regarding exemption are valid. You may not get the exemption.

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[Mahir S]

Sir,

The wording of the notification is "canteen maintained in a factory covered under the Factories Act, 1948 (63 of 1948)". It means only those canteens which is mandatory for the Employer to maintain under the Factory Act. This mandatory condition is applicable only to those factories having more 250 employees as per the Factory Act. If factory is having less the 250 employee and maintaining canteen for their employee then it is not covered under this notification. Such canteen is maintained by the employer not as per provision of Factory Act but as per the employment terms/Agreement agreed by the employer with factory Staff/worker.

AI Summary

Canteen exemption limited to mandatory factory canteens; voluntary employer canteens in smaller factories not covered. The exemption applies only to canteens that the employer is statutorily required to maintain under the Factories Act; because the statutory canteen obligation is triggered by the Act's employee threshold, canteens voluntarily provided by employers in factories below that threshold are not covered by the Notification and therefore do not qualify for the service tax exemption.