Service Tax on Canteen Bills

[Guest]

Dear Sir / Madam,

We have canteen with subsidies food in our company. It is owned by third-party. They raise monthly bill on company. One is for subsidies food and another is for coupons issued to employees.

He raise bill for subsidies foods with abetment of 50% as per sub clause zzt of Section 65. Company pays bill with Service Tax and avail credit. In the second case, he raise the bill for coupons issued to employees including Service Tax. Company pays him with ST and do not avail credit.

Since it is pure reimbursement of bill to contractor and company is recovering the coupon charges from its employees's salary.

How can he raise the service Tax?

[YAGAY andSUN]

Since your case does not fall under the category of 'Pure Agent, therefore, you are being charged for Coupan issued by Contractor.  Kindly aslo refer Sodexo case in this regard where Hon'ble Tribunal has held that it is taxable service.

[NANDKUMAR SAGWEKAR]

Dear Mr. Prakash Patil

The reply given earlier by Mr. Khatri is correct. Further we like to add that w.e.f. 01/04/2011 there are changes in cenvat credit rules , if the services avail which are  wholly consumed

by the employees like staff bus,canteen etc , eligibility of cenvat credit to be checked once again , I as per my view w.e.f. 01/04/2011 , you are not eligible to take cenvat credit on outdoor caterer services in this factory canteen case.

 

Thanks

 

A M HEMBEKAR

9421187122

 

AI Summary

Service tax on canteen charges: employee meal coupons treated as taxable service, cenvat credit eligibility limited. Service tax is levied on third party canteen charges including employee meal coupons; the arrangement is not a Pure Agent relationship so coupons are taxable. A 50% catering abatement is applied to subsidised food invoices and credit has been availed on that portion. Amendments to cenvat credit rules effective 01/04/2011 restrict credit for services wholly consumed by employees, potentially disallowing cenvat credit for outdoor caterer services in factory canteens.