Sale in canteen to workmen can be subject to GST
In Delta Jute Industries v. CTO (2001) 121 STC 186 (WBTT), it was held that supply of food to workman at a price is a ‘sale’ and is taxable – same view in Tata Iron v. State of Orissa (1975) 35 STC 195 (Ori) * Tata Iron v. State of Bihar (1985) 58 STC 302 (Pat) * BRPL Canteen Coop Soc v. State of Assam
(2003) 130 STC 138 (Gau HC) * Nuclear Atomic Power Supply Canteen v. CTO (2008) 18 VST 241 (All HC) * TVS Motors Co Ltd. v. State of Karnataka (2014) 46 GST 730 = 47 279 (Karn HC DB).
In a contrary decision, in CST v. Hukumchand Mills (1988) 68 STC 378 (MP) – followed in Shri Dayabhai v. State of MP (1999) 116 STC 500 (MP HC) – it was held that canteen run by contractor in factory as required under Factories Act is a service to workers. It is not ‘sale’ and there is no liability to sales tax.
In Indian Airlines Staff Canteen v. State of Andhra Pradesh (2010) 2 GST 498 (STAT AP), canteen was located in prohibited area where outsiders were not allowed. Canteen was established as per requirement of Factories Act and food at subsidised rate was supplied to employees at subsidised rates. Hence, it was held that this is not ‘trading activity’ or ‘business activity’ and hence no sales tax is attracted.