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ITC on canteen, Goods and Services Tax - GST

Issue Id: - 113633
Dated: 17-4-2018
By:- Shankar Nayakar
ITC on canteen

  • Contents

Dear sir,

we are manufacturing co. and having canteen facility also in co. premises.

third party is cooking here and raise invoice with GST to us., we are paying him with GST.

however company is charging nominal fee from employees.

in this scenario, ITC is eligible or not?

Posts / Replies

Showing Replies 1 to 15 of 25 Records

1 Dated: 17-4-2018
By:- Alkesh Jani

Sir, In my point of view ITC is not available.

2 Dated: 17-4-2018
By:- Alkesh Jani

Sir, Please refer Section 17(5) of CGST Act, 2017. Moreover, it has no nexus with the business or furtherance of business.

3 Dated: 17-4-2018
By:- Shankar Nayakar

sir, please refer attached copy of AAR, where it is stated that in GST Scenario, providing of canteen service is called as "outward supply"

kindly inform, can we avail ITC on that in GST scenario?

4 Dated: 17-4-2018
By:- Ganeshan Kalyani

GST is payable on the amount recovered from the employee as it amounts to outward supply.

5 Dated: 18-4-2018
By:- Shankar Nayakar

Cannot we avail ITC against disbursement to to third party ?

company is charging from employee concessional rate only.

6 Dated: 18-4-2018
By:- Ganeshan Kalyani

Outdoor catering service is included in the negative list given u/s 17 (5) of CGST Act. Credit is not allowed.

7 Dated: 18-4-2018

I endorse the views of both experts.

8 Dated: 18-4-2018
By:- Susheel Gupta

Dear Shankar

In my view ITC can be availed, since as per section 17(5)(b)(i), if food and beverage is used for making output taxable supply of same category ITC is available.

Also note that, since the employer and employee are related parties, GST in respect of supply made to employees shall be as per valuation rules and not the amount charged from employees.


CA Susheel Gupta

8510081001, 9811004443

9 Dated: 20-4-2018

Valuation under Valuation Rules has to be determined, if an assessee is unable to determine valuation under the Act due to various factors. Rules are not preferred to the Act. Rules are meant for "help" Rules cannot override the Act.

10 Dated: 20-4-2018
By:- subramanian vijayakumar

I endorse sethi ji view he can not claim and avail ITC

It is outdoor catering

11 Dated: 22-4-2018

ITC in respect of 'Catering (Food and Beverage etc) & 'Works Contract Service' on the same taxable output service is virtually denied.

12 Dated: 22-4-2018
By:- CASusheel Gupta

Issue – Valuation as per Act/Rules

Section 15 (1) on valuation states - The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply

This sub section is applicable when price paid or payable is the sole consideration and the two parties are not related parties.

Price means monetary consideration only

Employer and employee are related parties

Sub section (4) provides that “where the value of the supply of goods or services or both cannot be determined under sub-section (1), the same shall be determined in such manner as may be prescribed’

Since the Employer and employee are related parties we have to refer to rules and have no other option.

Issue – Whether ITC of food and beverage is allowed or not, if allowed in which case

Section 17(5)(b)(i) denies ITC but at the same time gives one exception when ITC can be availed It states “food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply”.

We need to read the exception which allows ITC where inward supply of food and beverages, outdoor catering are used for making outward supply. As such where a banquet hall, sub contracts supply of food and sub-contractor charges GST, the banquet hall can take input.

But the restriction has been put by notification 11/2017, where caterer is charging GST @ 5% he cannot take ITC. Even a caterer can take input if he is charging 18%.

Comments of experts are welcome.

13 Dated: 27-4-2018
By:- Himansu Sekhar

Value addition is not a factor to determine the ITC. No where it has been mentioned. The requirement of the Law has to be observed to get the benefits of ITC. The credit is not allowable when specifically barred under Sec. 11(5).

14 Dated: 30-4-2018

Humbly but Surprisingly, when Mr. Sushil Gupta is raising some points clearly producing the provision of the act and rule, most of the expert preferring to give verdict without healthy and point to point discussion.

Mr. Gupta has raised some valid questions to be replied today or tomorrow. Food and Beverage , Outdoor catering, and restaurant service are three separate goods and services and should be dealt separately and should not be clubbed while referring act and rules.

There may be different scenario with different treatment for taxation of gst.

Like full/part amount recovered by employee, amount not recovered by employee, in some of them outsiders also allowed to eat in canteen alongwith employees.

15 Dated: 30-4-2018

Dear Sir, Experts give their opinions and not verdict. Nobody is perfect. Experts often request intervention of others in complicated issues. Sometimes one expert gives one's opinion on the issue and another expert posts legal force by way of incorporating Sections, Acts, Circulars, case laws, notifications etc. Thus reply becomes complete. Every expert is busy and they devote their valuable time as per their knowledge and experience in respective field of taxation. Due to paucity of time sometimes an expert gives reply in brevity which also serves purpose. When all the experts contribute profusely, the querist gets a very clear picture of the issue. All experts welcome the views of others wherever any expert gives perfect reply. We are thankful to TMI for according such a useful platform where we can express our views based on knowledge, education, and experience and the same are perused by various persons (unlimited number of visitors of this site) not only in India but also abroad.


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