canteen ITC

[Madhavan iyengar]

In case of a company which has provided a canteen facility ( ie eating place) with food served by caterer.

First Scenario

Caterer has following billing pattern he charges 5% GST. Company recovers part amount from employee

Issue: Whether Company can discharge GST on recovered amount from employee @5% or company has to discharge gst on full value of canteen bill

will valuation rule come into play since employer and employee are related party

Second scenario: Caterer charges 18% GST and Company discharges gst @18% on the entire canteen bill ( company recovers only part amount from employee)

in above case can company claim the itc of canteen ??? will it fall under the exception to sec 17(5) ie like supplies

AI Summary

Market value valuation requires GST on the full canteen charge; reduced rate for contractual canteens excludes input tax credit.
Supply of canteen food to employees by a third party caterer is to be valued at market value where employer and employee are related, so GST is payable on the full canteen bill even if only part is recovered from employees. Contractual canteen/mess/cafeteria services supplied by institutions are subject to a reduced rate under notification with a condition of non availment of input tax credit, affecting ITC eligibility and requiring appropriate apportionment of common credits when that option applies.