One more query regarding canteen prices fixation:
a) Should GST be borne by the employer or the employee when a canteen is running in a factory as per the Factories Act 1948 with a NO-LOSS NO-PROFIT policy in Karnataka? In my view, the GST is paid to the grocery vendor or vegetable vendor by the factory and is claimed by the factory when filing GST. However, the employer is claiming that the employee should bear the GST amount.
b) What is the GST value for the canteen running in a factory that is maintained by the employer?
From India, Bengaluru
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1a) Should GST be borne by the employer or the employee when a canteen is running in a factory as per the Factories Act 1948 with a NO-LOSS NO-PROFIT policy in Karnataka? In my view, the GST is paid to the grocery vendor or vegetable vendor by the factory and is claimed by the factory when filing GST. However, the employer is claiming that the employee should bear the GST amount.
b) What is the GST value for the canteen running in a factory that is maintained by the employer?
From India, Bengaluru
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A reading of this link will be helpful:
https://taxguru.in/goods-and-service...rial-unit.html
An AAR ruling in this case would be helpful:
https://taxguru.in/goods-and-service...employees.html
From India, Pune
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https://taxguru.in/goods-and-service...rial-unit.html
An AAR ruling in this case would be helpful:
https://taxguru.in/goods-and-service...employees.html
From India, Pune
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Sir,
Running a canteen falls under the purview of the Factories Act, the Industrial Employment Standing Orders Act. Therefore, it is considered a welfare measure. Typically, the company should bear the expenses associated with running the canteen, such as providing infrastructure like a dining hall, plates, vessels, gas stoves, etc. If these expenses are not included, the GST amounts will add to the total cost of expenses for cereals without separate calculations for purchasing ingredients like rice, vegetables, cereals for the menu. Include these costs in the total purchase cost. Then, as per your agreement, bear the expenses as usual. There should be no issues. Do not raise any concerns as this could lead to unrest within the company and disrupt industrial peace.
From India, Nellore
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Running a canteen falls under the purview of the Factories Act, the Industrial Employment Standing Orders Act. Therefore, it is considered a welfare measure. Typically, the company should bear the expenses associated with running the canteen, such as providing infrastructure like a dining hall, plates, vessels, gas stoves, etc. If these expenses are not included, the GST amounts will add to the total cost of expenses for cereals without separate calculations for purchasing ingredients like rice, vegetables, cereals for the menu. Include these costs in the total purchase cost. Then, as per your agreement, bear the expenses as usual. There should be no issues. Do not raise any concerns as this could lead to unrest within the company and disrupt industrial peace.
From India, Nellore
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Yes, sure it's subjected to GST as per extant rules.
Schedule II to the GST Act describes the activities to be treated as supply of goods or supply of services. As per clause 6 of the Schedule, the following composite supply is declared as supply of service.
"supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration. "
The AAR observed that even though there is no profit as claimed by the applicant on the supply of food to its employees, there is ‘supply’ as provided in Section 7(1) (a) of the GST Act, 2017. The applicant would definitely come under the definition of ‘Supplier’ as provided in sub-section (105) of Section 2 of the GST Act, 2017.
Further, since the applicant recovers the cost of food from its employees, there is consideration as defined in Section 2(31) of theGST Act, 2017.
The Authority for Advance Ruling (AAR) ruled that the recovery of food expenses from the employees for the canteen services provided by company would come under the definition of ‘outward supply’. Therefore, it would be taxable as a supply of service under GST.
The AAAR observed that crucial issues involved are that of ‘consideration’ and ‘supply’. It held that inspite of the absence of any profit, the activity of supplying food and charging price for the same from the employees would surely come within the definition of ‘supply’ as provided in Section 7(1)(a) of the GST Act, 2017. Consequently, the appellant would definitely come under the definition of ‘supplier’ as provided in sub-section (105) of Section 2 of the GST Act, 2017. Moreover, since the appellant was recovering the cost of food items from their employees, there was ‘consideration’ as defined in Section 2(31) of the GST Act, 2017.
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As such, the question of who would bear the addl.levy is left to the discretion of the employer/employee combine. Most of these canteen supplies are subsidised and any GST will have to be subsumed in the subsidy if employees not agreeing a proportionate increase in prices of food stuffs supplied in the canteen.
From India, Bangalore
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Schedule II to the GST Act describes the activities to be treated as supply of goods or supply of services. As per clause 6 of the Schedule, the following composite supply is declared as supply of service.
"supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration. "
The AAR observed that even though there is no profit as claimed by the applicant on the supply of food to its employees, there is ‘supply’ as provided in Section 7(1) (a) of the GST Act, 2017. The applicant would definitely come under the definition of ‘Supplier’ as provided in sub-section (105) of Section 2 of the GST Act, 2017.
Further, since the applicant recovers the cost of food from its employees, there is consideration as defined in Section 2(31) of theGST Act, 2017.
The Authority for Advance Ruling (AAR) ruled that the recovery of food expenses from the employees for the canteen services provided by company would come under the definition of ‘outward supply’. Therefore, it would be taxable as a supply of service under GST.
The AAAR observed that crucial issues involved are that of ‘consideration’ and ‘supply’. It held that inspite of the absence of any profit, the activity of supplying food and charging price for the same from the employees would surely come within the definition of ‘supply’ as provided in Section 7(1)(a) of the GST Act, 2017. Consequently, the appellant would definitely come under the definition of ‘supplier’ as provided in sub-section (105) of Section 2 of the GST Act, 2017. Moreover, since the appellant was recovering the cost of food items from their employees, there was ‘consideration’ as defined in Section 2(31) of the GST Act, 2017.
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As such, the question of who would bear the addl.levy is left to the discretion of the employer/employee combine. Most of these canteen supplies are subsidised and any GST will have to be subsumed in the subsidy if employees not agreeing a proportionate increase in prices of food stuffs supplied in the canteen.
From India, Bangalore
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In simple terms, the GST burden is to be borne by the employer/company. For the raw materials purchased by the company, such as for the canteen including utensils, kitchenware, etc., the GST paid by the company can be collected back through input tax credit. As it is a factory canteen, employees have to be provided with only subsidized food.
From India, Aizawl
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From India, Aizawl
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GST is applicable at the rate of 5% without ITC. Employers are supposed to bear the GST. Employees of the company are out of the purview of GST.
However, there is an ambiguity with the 18% rate, particularly when services are provided by a catering services provider on contract. In the case of 18%, the employer can avail ITC.
From India, Vadodara
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However, there is an ambiguity with the 18% rate, particularly when services are provided by a catering services provider on contract. In the case of 18%, the employer can avail ITC.
From India, Vadodara
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Dear colleagues,
One more facet on the issue, please take note of a judgment passed by the AP High Court on a similar issue. Please see the excerpts from the judgment attached. Here, the sale of subsidized food to the workers is treated as part of 'wages' under the ID Act, and VAT was paid by the employer. Hence, it is held not to be a 'service' under the ST.
From India, Bangalore
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One more facet on the issue, please take note of a judgment passed by the AP High Court on a similar issue. Please see the excerpts from the judgment attached. Here, the sale of subsidized food to the workers is treated as part of 'wages' under the ID Act, and VAT was paid by the employer. Hence, it is held not to be a 'service' under the ST.
From India, Bangalore
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