This ruling gives an interesting interpretation, considering that many taxpayers have interpreted to the contrary.
In the instant case, it also ruled that GST is not leviable on the amount (partly) recovered by the employer from employees for use of the canteen facility. In this context, the following points warrant attention:
- Definition of the term “business” is quite wide under Section 2(17) ibid to include any activity or transaction in connection with, or incidental or ancillary to, trade, commerce, manufacture, profession, etc. Provision of canteen facility to employees, especially that which is mandatory under law, would be ancillary or incidental to the main business.
- Employer and employee are related persons within the deeming fiction under Explanation to Section 15 ibid.
- Supplies between related persons, even without consideration, is included within the definition of the term “supply” under Section 7 ibid read with Schedule I thereunder.
A conjoint reading of the aforesaid provisions indicates that provision of canteen facility by the employer to the employee is a “supply” within the meaning of CGST Act. However, neither these provisions nor Rule 28 of CGST Rules, 2017 (which prescribes the method of valuation of supplies between related persons) were deliberated in the said ruling.