Tax on Canteen Service

[Pradeep Kaushik]

Dear Sir/s,

 

Our company, in Gurgaon (Haryana), is providing canteen services to all employees. We have a contract from outside agency, who provides all canteen service.

We are receiving the bill like below:

Total Meal                                               10000.00

Add: Service Tax @ 6.18%                       618.00          (50% Abetment on Total Meal Value)

Add: Vat @ 13.125% 0n 10618/-          1394.00

Total Bill Amount                                    12012.00 

 

Please suggest the tax liabilty on Canteen Service. Is our Vendor is making the Invoice according to Tax Obligation.

Best Regards.

[YAGAY and SUN]

According to the definition of the Sales Price under Section 2 (zg) of the HVAT Act, 2003 as amended time to time, the calculation seems to O.K.  Since VAT is applicable on the sales of goods, hence, Calculation of VAT on Service Tax amount doesnot seem correct.

This aspect can be got clarified from the VAT Department under Section 56 (3) of the HVAT Act or you may get it clarified from your counsel.

AI Summary

VAT on canteen service: VAT should not be applied to the service tax component, seek statutory clarification.
The vendor's invoice applies service tax after abatement and then levies VAT on the invoice total including the service tax; while the invoice format aligns with the statutory Sales Price concept, VAT is generally chargeable on sale of goods and levying VAT on the service tax component appears incorrect, warranting statutory clarification or legal advice.