23 May 2010
The company pays lumpsum amount as subsidy to canteen contractor.Plz suggest on following issue that Whether Subsidy is liable for vat:
1) Assessee is running canteen in factory premises U/S 46 of factory act
2) it provides canteen facilities to employees only at susidized rate. Company deducts Rs.100/- p.m. per employee for such facility.
3) along with regular contract payment, the company pays lumpsum amount to caterer based on increase in Consumer Price Index. the caterer issues bill recovering service tax on the said amount.
Reference: 1. Tisco General Office reacreation club 126 STC 547 2. M/s Bayer India Ltd. DDQ No. DDQ- 11/2001/Adm-5/73/B-1 dated 9-10-2004
23 May 2010
The amount paid by the company as subsidy to canteen contractor shall be consider as consideration for the supply of food to the employees, hence accordingly the liability of VAT payment would arise on subsidy amount
24 May 2010
Thanx sir, But in Tisco case the lumpsum subsidy given by th company to the canteen contractor was held as non taxable.plz refer the case and the DDQ.
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