Levy of GST— In the instant case, the applicant sought Advance Ruling on the following question:

Whether recovery of nominal amount from the employees for making payment to the third-party service provider, providing food in canteen as mandated in the Factories Act, 1948 would attract tax under GST?’

The applicant has stated to be engaged in the manufacture of sugar, molasses, Denatured ethyl alcohol, and ethyl alcohol. They have stated that they have two manufacturing units located at Kattur and Sathamangalam, wherein around 300 workers have been employed. 

Section 46 of the Factories Act, 1948, prescribes for the operation and maintenance of canteen for the use of the workers, where more than two hundred and fifty workers are ordinarily employed. Accordingly, they had set up canteen facility at both the units, for the benefit of its employees and workers.

The question is in respect of whether they are liable to pay tax on recovery of amount from the employees for making payment to the third-party service provider, providing food in canteen at their manufacturing units. The question is admissible as the same is covered under Section 97(2)(e) of the Act read with Section 95 of the CGST Act.

Held that— In the case at hand, the applicant supplies food to their employees at a nominal cost, and the same is the consideration for such supply made by the applicant on which GST is liable to be paid. The recovery of cost from the salary as deferred payment do not alter the fact of the service provided and the person providing the said supply. The third party vendor has entered into agreement with the applicant for running of canteen in their sathamangalam unit and is paid service charges which is a supply made by the third-party-vendor to the applicant. The supply of food by the employer, i.e, the applicant to their employees is composite supply of food held as ‘Supply of service’ as per Schedule-II of the GST Act and the amount collected by the applicant is a ‘Consideration’ on which GST is liable to be paid.