TMI Blogcanteen ITCX X X X Extracts X X X X X X X X Extracts X X X X ..... In case of a company which has provided a canteen facility ( ie eating place) with food served by caterer. First Scenario Caterer has following billing pattern he charges 5% GST. Company recovers part amount from employee Issue: Whether Company can discharge GST on recovered amount from employee @5% or company has to discharge gst on full value of canteen bill will valuation rule come into play since employer and employee are related party Second scenario: Caterer charges 18% GST and Company discharges gst @18% on the entire canteen bill ( company recovers only part amount from employee) in above case can company claim the itc of canteen ??? will it fall under the exception to sec 17(5) ie like supplies - Reply By Nata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rajan Ramakrishnan - The Reply = Dear Mr Madhavan, As pointed out the employer and employee are related person and squarly fall under Schedule I of the CGST Act . As per valuation rules 28 , the value of supply of goods or services or both between related persons will be valued at the the open market value of such supply Sec 2(73) defines the market value which mean the full amount which a recipient of a supply is required to pay in order to obtain the goods or service or both of like kind and quality at or about the same time and at the same commercial level where the recipient and supplier are not related. Going by the above, the amount recovered from the employee shall be paid on the full value of the canteen bil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. The second question you posted is whether ITC Can be availed on such service received from the caterer. If the canteen is mandated as per law ( like factories act), the amended provision allows to avail the Input credit. Further invite your attention on the Advance ruling passed at State of Kerala in the case of caltech polymers pvt ltd. R. Natarajan - Reply By Madhavan iyengar - The Reply = thanks for your reply following clarifications required a) what you are saying is GST is required to be paid whether there is part recovery / full recovery from employees for canteen and GST is required to be paid on the entire canteen bill ie the market value. b) sec 17(5)(b) - credit is not allowed for out door catering excep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t when an inward supply of goods or services (b) the following supply of goods or services or both- (i) 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; if u see above extract if canteen service provider has charged gst 18% and company has discharged 18% gst from employees for canteen services provided then will it not fall in above exception marked in bold thereby credit could be availed - Reply By Spudarjunan S - The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reply = Dear Sir, In case of canteen supply CBIC has issued notification no.13/2018 dated 26th July 2018 provides inserts explanation to serial no.7 of notification no.11/2017 dated 28th June 2017 for clarifying the rate of tax for supply of canteen, mess, cafeteria of an institution such as a school, college, hospital, industrial unit, office by such institution or through any third party based on a contractual arrangement with such institution for such supply, provided that such supply is not event based or occasional as 5% with a condition of credit of input tax charged on goods and services used in supplying the service has not been taken. So w.e.f 26.07.2018, canteen services will be taxable @ 5% without availing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ITC. So you can't avail the ITC of canteen services even though you provide canteen services since the same is taxable @ 5% with a condition of non-availment of ITC. Further such supplies has to be treated as exempt supply for the purpose of Rule 42, 43 calculation. i.e. apportionment of common credits of taxable, exempted supply. Summarised - Sl.No Particulars Till 14.11.17 from 15-11-17 to 25-07-18 from 26-07-18 A For third party caterers 18% 18% 5% B Whether above (A) ITC eligible for Company Yes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Yes - depends on tax rate opted by the company on its outward supply. No C Employer - Canteen services liability 12% 5% without ITC 18% with ITC 5% without ITC D Should include in exempt TO No Yes/No Yes E Rule 42 applicability No Yes, if 5% option opted. All the common credits would be reversed in proportion to 5% without ITC supply Yes. All the common credits would be reversed in proportion to 5% without ITC supply F Cost to Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny - Depends 10% and reversal of common ITC. - Reply By KASTURI SETHI - The Reply = Dear Sh.Spudarjunan S.,. In view of the substance and clarity in your reply, I would not hesitate to say that you are possessing old head on young shoulders. Kudos to you. Keep it up. - Reply By Spudarjunan S - The Reply = Dear Shri.Kasturi Ji, Thank You sir.Your comments meant a lot to me and thanks for recognizing. - Reply By YAGAY andSUN - The Reply = Food supplied in Canteens of Office Colleges on Contractual Basis attracts 5% GST: AAR The Telangana State Authority for Advance Rulings (AAR) 2018 (12) TMI 1088 - AUTHORITY FOR ADVANCE RULINGS, HYDERABAD TELANGANA has held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the supply of food in canteens of office, factory and colleges on contractual basis taxable at the rate of 5% GST. According to the ruling of the authority, the activity of supply of food in canteens of office, factory, hospital, college, industrial unit etc. on contractual basis excepting that supply is not event-based or on specific occasions, constitutes the supply of service. The applicant is engaged in the business of Cleaning Services, maintenance of canteens in Industries, Educational establishments, providing food to student mess/s, training institutes and so on since the year 2005. - canteen ITC - Query Started By: - Madhavan iyengar Dated:- 11-1-2019 Goods and Services Tax - GST - Got 6 Replies - GST - Discussion Forum - Kn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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