Levy of GST- In the instant case, the applicant (M/s. Cadmach Machinery Co. Pvt. Ltd) is engaged in manufacture and supply of pharmaceutical machinery. Cadmach is working with the capacity of approximately 400 employees & workers. In compliance to section 46 of the Factories Act, Cadmach is carrying out canteen facilities through third party canteen service at their factory. The model that they have in their factory is that the food is being offered to employees on subsidized rate whereby the employee's share of the cost is being deducted from their salary.

Question on which Advance Ruling sought is as follows:

Whether recovery of amount from employee on account of third party canteen service provided by assessee, which is obligatory under section 46 of Factories Act, 1948, would come under definition of, 'outward supply' and, therefore, taxable as a 'supply' under GST.

This authority find that Cadmach has arranged a canteen for its employees, which is run by a Canteen Service Provider. As per their arrangement, part of the Canteen charges is borne by Cadmach whereas the remaining part is borne by its employees. The said employees’ portion canteen charges is collected by Cadmach and paid to the Canteen Service Provider. Cadmach submitted that it does not retain with itself any profit margin in this activity of collecting employees’ portion of canteen charges. 

This authority is not inclined to accord this canteen service facility provided by Cadmach to its employees to be an activity made in the course or furtherance of business, to deem it a Supply by Cadmach to its employees. 

Held that- GST, at the hands of the Cadmach, is not leviable on the amount representing the employees portion of canteen charges, which is collected by Cadmach and paid to the Canteen service provider.