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GST on Canteen Service

Mahesh Radadiya (Manager Account) (39 Points)

29 April 2018

GST is Leviable or not if canteen service provided by small scale industry at free of cost to their employees

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CA Rashmi Gandhi (Chartered Accountant) (86298 Points)
Replied 29 April 2018

No......

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Pankaj Rawat (GST Practitioner) (55037 Points)
Replied 29 April 2018

From the reading of the definition of “business” in the GST Act, it can be concluded that the supply of food by the applicant to its employees would come under clause (b) of Section 2(17) as a transaction incidental or ancillary to the main business - Even though there is no profit as claimed by the applicant on the supply of food to its employees, there is “supply” and the applicant would come under the definition of “Supplier”

So as to notification 46/2017 CT (r) Gst is applicable 5% on canteen services

As per section 17(5), cant supplies free , has to reverse ITC

Mahesh Radadiya (Manager Account) (39 Points)
Replied 29 April 2018

Thanks for reply

Itc available or not for input use to providing free canteen service to employees

Pankaj Rawat (GST Practitioner) (55037 Points)
Replied 29 April 2018

No, Thats what section 17(5) says that if u r providing free canteen service u have to reverse ITC

Even though u charge 5% on canteen services , (as concessional rate) u wont be eligible to claim ITC

CA Rashmi Gandhi (Chartered Accountant) (86298 Points)
Replied 29 April 2018

But any supply provided by employer to employee in course of employment is not a supply as per Schedule III. So, no GST is payable on such transaction...

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Pankaj Rawat (GST Practitioner) (55037 Points)
Replied 29 April 2018

According to Premise of Advance Ruling Judgment in the case of Caltech Polymers Pvt. Ltd., Kerala -
The supply of food in canteen from employer to its employee is cover under the defination of supply (section 7 cgst)
Hence chargeable to GST

sheik javid (student) (281 Points)
Replied 29 April 2018

There is no GST for employer and employee situation. so No GST for free canteen service

Pankaj Rawat (GST Practitioner) (55037 Points)
Replied 29 April 2018

@ sheik ji

u cannot ignore advance ruling judgement
its is to be applicable on all taxpayer

CA Rashmi Gandhi (Chartered Accountant) (86298 Points)
Replied 29 April 2018

But in the given case co. is charging cost from eemployees, so same is considered as supply.

In above no consideration is charged from employee & same is in course of employment not for business....

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Pankaj Rawat (GST Practitioner) (55037 Points)
Replied 29 April 2018

Yes , u r correct , but if free is provided then section 17(5) is applicable

An employer cannot avail input tax credit on goods given as gift to employees under GST.

Gifts to employees, that exceed Rs. 50,000 in value in a financial year, are taxable under GST.

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CA Rashmi Gandhi (Chartered Accountant) (86298 Points)
Replied 29 April 2018

Sec 17(5) arises in case of ITC but here no question about ITC to be claimed.

Here query is to charging GST on invoice...

If employer is claiming ITC then same is required to be reverse immediately....

Pankaj Rawat (GST Practitioner) (55037 Points)
Replied 29 April 2018

But still if free food provided , valued exceeds 50k in fy is taxable

CA Rashmi Gandhi (Chartered Accountant) (86298 Points)
Replied 29 April 2018

Yes but 50000/- limit to single employee not all...

So I assume that amonut is less than Rs.50000/- so no GST arises...

Pankaj Rawat (GST Practitioner) (55037 Points)
Replied 29 April 2018

So the final conclusion is

1. If Free canteen (food) Services provided No Gst will levy

2. ITC has to reverse as per section 17(5)

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