Question 33: Many Factories (registered under GST) are providing subsidised food to their employees, through their Employees Co.operative Societies (registered under GST). Every things are given by factory to Employees Co.operative Society who is preparing food through contract manpower on society`s account. Bill is raised by Society in favour of factory for re-imbursemnet of expenses (expenses incurred on labour charges). GST is charged as applicable i.e. @ 18%.
Food is also given to Guest visiting Factory. For which factory recover some amount.
Also Factory recovering tokan amt. from each employee towards subsidised canteen provided.
Question :
1. Whether GST charged on reimbursement amt. i.e. expenses incurred on labour charges is correct or what will be the valuation formula for subsidised canteen '
2. Is GST required to be paid on amount recovered from Factory Employees '
3. Is GST required to be paid on amount recovered from Factory Guests '


Answer As per Advance Ruling Authority the subsidized food given to employees is subjected to GST. But in our opinion it should not be considered as supply because it is part of working facility like the facilities of restroom, washroom, etc is provided to employees. There is one more view that if it is considered as supply then the limit of Rs 50000/- available against gift to employees should be taken into calculation.

But keeping in mind the decision of Advance Ruling our answer is as follows:

1. The valuation Rule 28 of CGST applicable to related person should apply.

2. Already discussed in above para.

3. Yes, GST should be charged from factory guest but on transaction value.

The decision of Advance Ruling Authority is enclosed for your reference. (reply dt. 05/18/2018)