Canteen expanses from employees will be a “supply”.
An application was filed for the advance ruling in which a firm provides their employees with the canteen services. The company is following the factories act which binds them for providing the canteen services to the employees. According to Factories Act, 1948, if the factory or company have 250 employees or more, the company has to provide the canteen services.
The company is in the business of manufacturing and selling of the footwear. All the expenditure was born by the company. And afterwards, these expenses are reduced from the salary of the employees. And no profit margin is added to the amount deducted or collected from the employees.
The opinion of the company in this regard was that the services do not fall under the definition of “supply”. And raised the question in the application regarding the taxability of the supply provided by the company.
Ruling
It is hereby clarified that recovery of food expenses from the employees for the canteen services provided by the company would come under the definition of ” outward supply”
You can download the case and its ruling issued by the Authority of the advance ruling:
Issued Ruling
