M/S GOODWILL INDUSTRIAL CANTEEN

The Applicant is engaged to render catering services to various companies. They prepare food in their place and supply to the employees of their clients/companies. The said companies provide them the rent free space along with required furniture, fittings, cooking and catering utensils, and crockery and cutlery items apart from providing water, electricity and fuel to distribute the food to the employees of the companies. They purchase the required provisions, vegetables, etc. prepare food stuff as per the menu given by the Management using its own manpower. This will be served to the employees, by collecting coupons on behalf of the client. Based on the coupons collected, the Applicant will give a bill and payment will be made by the company to the Applicant on monthly basis.

The Applicant has sought Advance ruling on "Determination of rate of tax on service of supplying food to employees"?

The Applicant submitted that on interpretation of Notification 11/2017CT(R) dated 28/06/2017 as amended, GST for the catering services rendered by them is 5%.

Earlier the intention of having tax rate of 5% as in Sl.no 7(i) is only in respect of supply of foods in Standalone restaurants and other similar eating joints and that in Hotels wherein the declared tariff of any unit of accommodation is less than Seven thousand Five hundred only i.e. it is applicable in cases where the consumers who purchase the food & beverages, do so on the premises of the supplier of such food & beverages and directly pay to such supplier. Therefore, the supply of food by the applicant in the premises of client, whether prepared in that place or brought and served is more appropriately covered by the description at Sl.No. 7(v) of the Notification No. 11/2017 C.T. (Rate) and is liable to tax at 9% CGST and 9% SGST.

In this case the Applicant is vested with management of the canteen facilities. The Recipient of the services are the companies who enter into contract with the applicant.

Now as per Notification no. 11/2017 CT(R) amended vide Notification no. 13/2018 CT(R)  it is clear that the applicant is making supply of services in the dining space of the industrial units and offices which is squarely covered in the Explanation 1 to Sl.No 7(i) and Sl.No 7(v) now only covers supply at functions which are occasional and event based. The supply of food to institutions which were earlier covered under entry at Sl.No.7(v) has been included under Sl.No. 7(i)of the Notification No. 11/2017-CT (Rate) with effect from 27th July 2018 and thereupon is liable to tax at the rate of 5% subject to the condition that credit of input tax charged on goods and services used in supplying the services are has not been taken read with Explanation (iv) of said Notifications.

CRUX: The services of the applicant of supplying food and beverages on the premises of industrial unit/office, which are on the terms of the contract are liable to tax at the rate of 18% (9% CGST +9% SGST) under Sl.No. 7(v) of Notification No. 11/2017 -C.T. (Rate) dated 28.06.2017 for the period upto 26.07.2018 and from 27.07.2018 onwards at the rate of 5% (2.5% CGST + 2.5% SGST) under Sl.No. 7(i) of the Notification No. 11/2017-C.T. (Rate) as amended subject to the condition that credit of input tax charged on goods and services used in supplying the services are has not been taken read with Explanation (iv) of said Notifications.