M/S. CALTECH POLYMERS PVT LTD.

The applicant is a manufacturing company is also providing canteen services to its employees. The expenses of canteen are recovered from the employees without any profit margin.

The applicant has sought advance ruling on the following question;

"Whether reimbursement of food expenses from employees for the canteen service provided by company comes under the definition of outward supplies as taxable under GST Act."

Supply of food by the applicant to its employees is covered under clause (b) of Section 2(17) of CGST Act, 2017 as it is a transaction incidental or ancillary to the main business. Despite the fact that no profit is claimed on the supply of food to the employees, still providing food to employees amounts to "supply" within the meaning of Section 7(1)(a) of the said Act. As such, the applicant is covered under the definition of "Supplier" stipulated under sub-section (105) of Section 2 of the said Act.

Recovery of cost of food from the employees amounts to a consideration defined under Section 2(31) of the above said Act. Thus, providing food to the employees, even at subsidised rates is an out ward supply and is subject to GST at applicable rate.

Crux - Recovery of food expenses from the employees for canteen services provided by a company amounts to taxable outward supply as defined in Section 2(83) of the CGST Act, 2017 and is taxable.