Service tax liability on canteen bill
This query is : Resolved
22 September 2013
Dear Expert
in my company a canteen contractor is providing meal to staff and workers and changing service tax on 60% of gross value charged to company as per agreement. Now company is recovering some minor amount from its employee. Would on recovered amount attract service tax ?
in my company a canteen contractor is providing meal to staff and workers and changing service tax on 60% of gross value charged to company as per agreement. Now company is recovering some minor amount from its employee. Would on recovered amount attract service tax ?
22 September 2013
First, Let us understand the transaction. The canteen while providing the meals to the employee register the name of the employee with their respective signature for providing them the meal. At the end of the month the contractor prepares the bill alongwith the name of the employees to whom meal was supplied with the number of meals availed by them respectively. The company recovers the agreed cost of meals from the employee adds its contribution (which is call subsidy) and pay to the canteen contractor. This shows that the service has been provided by the canteen directly to the employees, the cost of which is deducted by the employer. In view of this,In my opinion the employer is not providing any service to the employees and therefore not liable for any service tax.
Please study carefully the contract/agreement between employees, employer and canteen contractor to more clarity.
disclaimer- all answers are given as per the facts narrated by you. Answer may differ after study of full facts/statements/agreements etc. involved in the case
Please study carefully the contract/agreement between employees, employer and canteen contractor to more clarity.
disclaimer- all answers are given as per the facts narrated by you. Answer may differ after study of full facts/statements/agreements etc. involved in the case
23 September 2013
The Transaction is, There is a agreement between Canteen Contractor and the company to provide meals to its employee. Canteen contractor records the entires prepare the bills and charging in the name of company as per agreement. Canteen Contractor is charging service tax on 60% of grros value charged, which is correct. Now Company recovers some minor amount from its employee as a partial recovery. My question is, on recovered part, is there a service tax ambiguity or not. Please help me by qutoing law.
23 September 2013
The employer is not providing any service to the employees, it is recovery of amount paybable by employees to the canteen. The accounting entries shouuld also be made in this manner.
disclaimer- all answers are given as per the facts narrated by you. Answer may differ after study of full facts/statements/agreements etc. involved in the case
disclaimer- all answers are given as per the facts narrated by you. Answer may differ after study of full facts/statements/agreements etc. involved in the case
23 September 2013
I agree with you. But my question is, on recovered part would be in tax net or not?
23 September 2013
No it is not taxable
disclaimer- all answers are given as per the facts narrated by you. Answer may differ after study of full facts/statements/agreements etc. involved in the case
disclaimer- all answers are given as per the facts narrated by you. Answer may differ after study of full facts/statements/agreements etc. involved in the case
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