M/S RASHMI HOSPITALITY SERVICES PRIVATE LIMITED

The Applicant is engaged in the business of caterers and supply food, beverages and other eatables (non-alcoholic drinks) complete services at various places of their customers who have in house canteens at their factories. It normally charges GST @ 18% classifying their services under heading 9963 as outdoor catering. It has received a contractor  from one customer for catering services to be provided to the staff and premise for services to be provided for canteen has also been made available to the applicant, which is non Air-conditioned. The said customer has asked the applicant to charge GST @ 12%.

The Applicant has sought Advance Ruling on "Determination of  classification and rate of tax on supply of food, beverage to the staff through in house canteens in factories"?

The Commissionerate opined that the activity carried out by the applicant appears to be in the nature of cooking of Foods and serving of foods along with edible preparations and it is classifiable as services provided in canteen and other similar establishments (Chapter Heading 996333).

The applicant is providing service to the recipient and not to workers / employees of the recipient. The rates for the meal, snacks, tea have been fixed and payable by the recipient. The menu is required to be decided by the canteen committee of the recipient. It is, therefore evident that the applicant, who is caterer, is providing service from other than his own premises to the recipient. Therefore, the nature of service provided by the applicant is that of outdoor catering service.

The Applicant has submitted that he is having business of caterers and supply food, beverages and other eatables (non-alcoholic drinks) complete services at various places of their customers who have in house canteens at their factories. The applicant has also submitted that applicant normally charges GST @ 18% classifying the services under heading 9963 as outdoor catering.

Further vide judgement, the Hon’ble High Court has observed that the taxable catering service cannot be confused with who has actually consumed the food, edibles and beverages which are supplied by the assessee. It is also held that the taxability or the charge of tax does not depend on whether and to what extent the person engaging the service consumes the edibles and beverages supplied, wholly or in part.

Therefore, the service of catering is provided by the applicant to the recipient and the fact that the meal, snacks, tea etc. are consumed by the workers / employees of the recipient would not alter the nature of service provided by the applicant.

Crux: The supply of services is covered under Sr. 7(v) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended, attracting Goods and Service Tax @ 18% (CGST 9% + SGST 9%).