Is vat/service tax applicable on canteen service

This query is : Resolved 

Querist : Anonymous (Querist) 09 December 2011

A person is providing catering service in my factory, registered under service tax & charging service tax. As per Sec 18 of Karnataka VAT Act, 2003 the factory has to deduct 4% tax & pay. So the service provider has to register under VAT also.
Whether canteen service provider is required to be registered service tax as well as VAT and pay both levies?

MJ Krishnamurthy (Expert)
12 December 2011

Mr. Author,
Yes, Registration under VAT is also necessary if the total income crosses the minimum required for registrationi.e. Rs5 lakhs. The canteen owner can opt for composition also.

Querist : Anonymous (Querist) 30 December 2011

Thank you. The canteen service is not cooking in the canteen. He is bringing the food from outside & serving food. In such case, whether Sec 18 of KVAT Act is applicable, whether company has to pay VAT on canteen bill? Service Tax is paid by canteen service provider.

MJ Krishnamurthy (Expert)
30 December 2011

Mr. Author,
Mainly sale of food and drinks is important not where it is prepared.Sec 18 of KVAT Act is applicable to all types.The company has to deduct tax @4% out of the amount payable to the canteen owner(if any as subsidy)and issue a certificate to that effect.The canteen owner can reduce an amount equal to the deduction made by the factory management from the tax payable by him to the government. Service tax is seperately governed by ST law.

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