Querry relating to canteen contractor

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dholyesv (Querist)

23 May 2010 The company pays lumpsum amount as subsidy to canteen contractor.Plz suggest on following issue that Whether Subsidy is liable for vat:

1) Assessee is running canteen in factory premises U/S 46 of factory act

2) it provides canteen facilities to employees only at susidized rate. Company deducts Rs.100/- p.m. per employee for such facility.

3) along with regular contract payment, the company pays lumpsum amount to caterer based on increase in Consumer Price Index. the caterer issues bill recovering service tax on the said amount.

Reference:
1. Tisco General Office reacreation club
126 STC 547
2. M/s Bayer India Ltd. DDQ No. DDQ-
11/2001/Adm-5/73/B-1 dated 9-10-2004

daya shankar singh

daya shankar singh (Expert)

23 May 2010 The amount paid by the company as subsidy to canteen contractor shall be consider as consideration for the supply of food to the employees, hence accordingly the liability of VAT payment would arise on subsidy amount

dholyesv

dholyesv (Querist)

24 May 2010 Thanx sir,
But in Tisco case the lumpsum subsidy given by th company to the canteen contractor was held as non taxable.plz refer the case and the DDQ.

CA Vijay Kumar Gupta

CA Vijay Kumar Gupta (Expert)

24 May 2010 Sir, Please confirm in which state you are regd. If possible send the full judgement quoted by you, so that I can reply your query.

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