Question

Amount paid to catering contractor towards food supplied to employees sitting on overtime. Similarly, Bus services provided to employees where partly the expenses are borne by XYZ Ltd. Is XYZ required to pay GST on the catering expenses incurred and amount paid for bus services?

Answer

In this case XYZ is procuring services from others and then providing those services to employees. Therefore two supplies are involved in this transaction i.e. XYZ is procuring inward supplies and providing outward supply to employees.

Thus XYZ is liable to pay GST on inward supply (catering and bus services) irrespective of whether outward supply is taxable or exempt i.e. even if XYZ will provide these services to employees free of cost, it will be treated as supply as per Schedule I clause 2. (Reply dt.11/12/2018)