Huge Relief: On Food Facility (Canteen services ) Furnished by a Business No GST is Applied

By | April 26, 2022

Huge Relief: On Food Facility (Canteen services ) Furnished by a Business No GST is Applied

Registered Companies under the Factories Act, 1948, usually provides canteen facility to their workers. Section 46 provides that any functioning unit having a specified number of employees i.e. quite 250 employees needed to supply canteen facility either by self canteen or by third party contract to its workers since this is obligatory.

 It has been noticed that the businesses offering working lunch or canteen services throughout working hours to workers at freed from charges or at subsidized/discounted rates or by covering a certain portion towards the canteen services in money payment from workers or deduction of such quantity from the monthly salary of workers.

 Now, the largest issue for all the businesses registered under the factories act, 1948 that whether or not offering canteen services through a 3rd party contractor for a thought aggregation as intermediator which too is while not acquiring any profit gives a supply under GST law? This can be the subject material of confusion and is certain to extend the dispute between businesses entities and the GST department.

It absolutely was additionally processed by the “AAA” i.e. Authority of Advance Ruling in numerous judgments in past and present against the business entities which are opted to travel for “AAA” and got the adverse rulings of GST discharge on food facility provided by business entities or firms.

Within the matter of Amneal pharmaceuticals  Pvt Ltd, (100% EOU), the AAR  was filed in Feb’2019 seeking an explanation of chargeable for  GST on the quantity recovered from company employees on account of third party canteen services provided by the company.

Within the year July 2020. the AAR deduced Ruling no. GUJ/GAAR/R/50/2020 Dated 30.07.2020 that recovery of a certain amount from workers on account of third party canteen services provided by the corporate, that is obligatory under Section 46 of the Factories Act, 1948 would be covered under the definition of ‘outward supply’ as outlined in Section 2(83) of the CGST Act, 2017 and thus, taxable as a supply under the GST.

Subsequently, the company most popular to challenge the above-given judgment and filed an appeal before the “The Gujarat Appellate Authority for Advance Ruling”. The authority ensures that “allow the appeal filed by the appellant M/s Amneal Pharmaceuticals Pvt Ltd and modify the Advance Ruling no. GUJ/GAAR/R/50/2020 Dated 30.07.2020 issued by GAAR, by holding that the products and Service Tax is not applied on assortment, by the appellant, of employees’ portion of a certain amount towards foodstuff provided by third-party/Canteen Service Provider”.

Comments: This judgment shall be applicable to Amneal Pharmaceuticals  Pvt Ltd and is not for different industries, however, considering the substantial tax impact, different industries might take AAR and calm down future disputes and litigations.

Share This:
Category: GST