CBEC exempts Services provided in relation to serving of food in canteen maintained by a Factory. Food or Beverages Services provided by a Canteen exempt from Service Tax

CBEC vide Notification No. 14/2013 – ST., Dated: October 22, 2013 has exempt the food or beverages services provided by a canteen by inserting entry no. 19A in the Mega Exemption List. The entry provides as under:
“19A. Services provided in relation to serving of food or beverages by a canteen maintained in a factory covered under the Factories Act, 1948 (63 of 1948), having the facility of air-conditioning or central air-heating at any time during the year.”

The Notification adds Entry No. 19A in the Mega Exemption Notification which provides as under:

“Services provided in relation to serving of food or beverages by a canteen maintained in a factory covered under the Factories Act, 1948 (63 of 1948), having the facility of air-conditioning or central air-heating at any time during the year”

In accordance with the above, services provided in relation to serving of food or beverages by a canteen having the facility of air-conditioning or central air-heating at any time during the year maintained in a factory covered under the Factories Act, 1948 will be exempt from levy of service tax.

Open Issues:
This is a welcome amendment made by the CBEC in the light of all air-conditioned restaurants including eating joints or mess etc., coming under the service tax net irrespective of the fact whether they serve alcoholic beverages or not vide Notification No. 03/2013-ST dated March 1, 2013 (“Notification 03/2013”) amending Serial No. 19 of the Mega Exemption Notification, with effect from April 1, 2013.
Further, the above addition vide Entry No. 19A will be applicable with effect from 22nd October, 2013 (Effective date of the Notification No. 14/2013-ST). Hence, the question will arise -> whether the said exemption is not available for the period starting from 1st April, 2013 to 21st October, 2013.
Furthermore, the Entry No. 19A states this exemption is available for Service provided in relation to serving of food in canteen maintained by Factory covered under the Factories Act, 1948 (63 of 1948), having the facility of air-conditioning or central air-heating at any time during the year. What about canteen maintained by the Service Provider?
We request to the Board to look into the matter and clarify this issue.
——————
Related Notification is as follows :-

Notification No. 14/2013-Service Tax,

Dated – 22nd October, 2013

G.S.R.____ (E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994,  (32 of 1994),  the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 25/2012-Service Tax, dated the 20th June, 2012, namely:-

In the said notification, in the opening paragraph, after entry 19, the following entry shall be inserted, namely:-

“19A. Services provided in relation to serving of food or beverages by a canteen maintained  in a factory covered under the Factories Act, 1948 (63 of 1948), having the facility of air-conditioning or central air-heating at any time during the year.”.

[F. No. B1/13/2013-TRU]

(Akshay Joshi)
Under Secretary to the Government of India

Note.- The principal notification was published in the Gazette of India, vide notification No.25/2012-Service Tax, dated the 20th June, 2012, vide G.S.R.467(E), dated the 20th June, 2012 and was last amended by notification No. 13/2013-Service Tax, dated the 10th September, 2013 vide G.S.R.616(E), dated the 10th September, 2013.

———-
Bimal Jain
FCA, FCS, LLB, B.Com (Hons)
Mobile: +91 9810604563
E-mail: [email protected]

Author Bio

More Under Service Tax

25 Comments

  1. H.R. Sreepada, Cost Accountant says:

    Is GST applicable on Industrial Canteen? There are different scenarios as below :-
    1. Food is prepared by hotel/restaurant, supplied to the factory and distributed to the staff/workers.
    2. Food prepared in a premises other than a hotel/restaurant, supplied to the factory and distributed to the staff/workers.
    3. An outsider prepares the food in a factory premises and serves the same to the staff/workers.

    Service Tax exemption was given vide ST Notification No.13/2013.

  2. Amit Kumar says:

    Any Clarity whether the exemption is only for the canteen wherein services are provided by the factory/workers or it also covers a Canteen serviced by a service provider (caterer)?

  3. shilpi jain says:

    From what i understand from the notification is that, as rightly stated by Mr. Rajesh,

    “The notification says ‘a canteen maintained in a factory covered under the Factories Act, 1948 (63 of 1948)’ and not ‘a canteen maintained by a factory covered under the Factories Act, 1948 (63 of 1948)’. Hence, I am of the opinion that exemption is available to a canteen maintained in a factory whether operated by a factory or by a service provider.”

    Further the serial no. 19 of the same notification covers cases of non air conditioned restaurant, eating joint and mess.

    So any canteen in a factory under Factories Act is exempt.

    To be more precise one has to see the meanings assigned to each of the word
    canteen
    mess
    eating joint and
    restaurant.

    Don’t know whether the words mentioned in s.no. 19 would cover canteen mentioned in s.no. 19A

  4. Roshan says:

    Dear Sir,

    If Service Provider is charging VAT for Canteen service with material than TDS is deducted or Not.

    Pls help,
    Roshan.

  5. Roshan says:

    Dear Sir,

    Pls explain if Service Tax if exempted & Cateen Service Provider charging VAT than TDS will be deducted or not.

    Thanks & Regards,
    Roshan.

  6. MN HEGDE says:

    Notification says whaterever services in relation to canteen maintained in factoy is exempt from service tax. It means canteen maintained in factoy run either by factory or service provider, service tax is exempted. Hence we told our vendor not to charge service tax on his bill.

  7. Ramakrishna says:

    A/C Canteen facility provided by the company Under factories Act, catering by third party & Company is not collecting any amt. from emploees i.e., company is providing free food to its employees is it ST exempted. Please clarify this…?

  8. Ashok Jogalekar says:

    I have already stated in my earlier comment that the service provided by company to the employees is exempted whether in a AC or Non AC canteen, but, if a contractor provides service to the company employees and bills to the company it is still taxable.

  9. Shailendra says:

    The Notification is clear as far as where the company is collecting some charges from their employee is exempt in both case weather canteen is AC or NON AC, however the notification is only talking about canteen service and not the catering service the same is still taxable as the caterer is charging the company for the food supplied.

    in case the food is prepared by the company itself by its own cook the service is exempt.

  10. Amar Singh says:

    In our Factory Canteen Service Is provided by Caterers and the Canteen is maintained by the Company purely for the purpose under the Factory Act. does the provider is Exempt from the Service Tax as he is charging us the Service Tax on his Monthly bill.

    there is air condition in the Factory Canteen.

  11. Amar Singh says:

    In our Factory Canteen Service Is provided by Caterers and the Canteen is maintained by the Company purely for the purpose under the Factory Act. does the provider is Exempt from the Service Tax as he is charging us the Service Tax on his Monthly bill.
    there is no aircondition in the Factory Canteen.

  12. Amar Singh says:

    My question is can somebody clarify the notification no. 14/2013 while
    In our Factory Canteen Service Is provided by Caterers and the Canteen is maintained by the Company purely for the purpose under the Factory Act. does the provider is Exempt from the Service Tax as he is charging us the Service Tax on his Monthly bill.
    there is fully air condition in the Factory Canteen.

  13. Mohan Poojary says:

    Dear Sir,

    We have Canteen Food service provider inside the factory as per monthly billing,now the question is is it service tax applicable in non ac canteen inside the factory as per factory act 1948

  14. Shailendra says:

    Dear Bimal Sir,
    Kindly Clarify

    In our Factory Canteen Service Is provided by Caterers and the Canteen is maintained by the Company purely for the purpose under the Factory Act. does the provider is Exempt from the Service Tax as he is charging us the Service Tax on his Monthly bill.
    there is no aircondition in the Factory Canteen.

  15. Ashok Jogalekar says:

    This is a ridiculous notification for two reasons:

    – It exempts only the factory covered under Factory Act, that means if a good factory employer not covered under Factory Act wants to provide food to their employees, then, he will have to bear the additional Service Tax burden for his goodness.
    – Whether it means non air-conditioned / non- heated canteen was exempted so far and whether it was covered under Mega exemption serial no 19 under “eating joint”, because Service Tax officials were raising demands on the service providers for food served at the Factory canteens and also the CENVAT credit was denied to the Factory as the service is for personal consumption.

  16. Ashok Jogalekar says:

    From the reading of the Notification No. 14/2013-Service Tax, Dated – 22nd October, 2013 it appears there was exemption for Canteen services provided by a service provider in a factory canteen where there was no Airconditioning or central heating.

    But most of the service providers were charging service tax even if there was no Airconditioning or central heating in the factory canteen.

    It is surprising there there was no case on this aspect.

  17. S.Kumarasamy says:

    “Services provided in relation to serving of food or beverages by a canteen maintained in a factory covered under the Factories Act, 1948 (63 of 1948), having the facility of air-conditioning or central air-heating at any time during the year” –

    Doesn’t it means that the exemption is available ONLY to the canteens (..in a factory … under FA 1948) having the facility of air conditioning or central air heating ? Is the exemption not available to the canteens in a factory but not having AC or central air heating ?

  18. S.Kumarasamy says:

    Doesn’t it means that the exemption is available ONLY to the canteens (..in a factory … under FA 1948) having the facility of air conditioning or central air heating ? Is the exemption not available to such canteens not having AC or central air heating ?

  19. Rajesh says:

    The notification says ‘a canteen maintained in a factory covered under the Factories Act, 1948 (63 of 1948)’ and not ‘a canteen maintained by a factory covered under the Factories Act, 1948 (63 of 1948)’. Hence, I am of the opinion that exemption is available to a canteen maintained in a factory whether operated by a factory or by a service provider.

  20. Satya says:

    Dear Bimal jain ji,

    Will you please clarify;

    Whether Industrial canteen runs in a factory not having the facility of Air condition but having cooking with process Steam facility. Service Tax liability as per New Notfn.14/2013-ST.

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

June 2021
M T W T F S S
 123456
78910111213
14151617181920
21222324252627
282930