Goods & Services Tax
GST Case Laws

Search GST Case Laws

Keyword

Authority

Court

Section

Appeal No.

Date of Order

Date of Order

Judge

Favouring

Login/Subscribe to get access. Plan starts from Rs. 3500/-  Subscribe Now

{field 13} {field 14}

Heard both sides and perused the records. This is a case of credit of the service tax paid on the food provided to the workers outsourced by the appellant. The definition of input service specifically excludes outdoor catering provided to the employees. The appellant argues that they have outsourced manpower to work in the factory and the service provider supplies manpower and bills for it. In addition to the wages for the workers, the appellant is also obliged to pay the manpower supplier charges towards food subsidy and few other allowances as per the contract. Providing subsidised food is necessary in view of the contract which they have with manpower supplier and also in view of the requirement of the Factories Act which requires the workers to be provided with subsidised food during work. The man power service provider supplies workers who are his employees and not the employees of the appellant. These workers work in the factory and they also get subsidised food in the canteen of the appellant. It appears that the canteen contractor is paid by the man power service provider for the subsidised food although it is not evident from the records. In turn, the man power service provider bills the appellant for the food subsidy including the service tax thereon. The issue in dispute is the credit of the service tax element on this food subsidy. It is the case of the Revenue that this food subsidy amounts to outdoor catering services for employees and the credit of the service tax thereon is inadmissible in view of the specific exclusion in the Rules. The appellant argued that although it is called food subsidy, in fact , it is manpower outsourcing service and it is also a component of the charges paid to the manpower supplier. The department, on the other hand, argues that the bill is raised specifically for food subsidy which is provided by outside canteen contractor and paid for by the appellant. Although the beneficiaries of the food subsidy are not regular employees of the appellant, nevertheless they are working in the factory of the appellant and enjoying the food in the canteen and hence this should be considered as an outdoor catering service which falls under the excluded category for service tax credit. It is also the argument of the department that even though the Factories’ Act mandates the provision of food, that does not itself entitle the appellant to credit of service tax paid as has been held by the Tribunal in the case of Neuland Laboratories Limited [2013-TIOL-1970-CESTAT-Bang].