Question

I am proprietor of a Restaurant and giving food supply service to customers at my own premises and also supply a food to outdoor customers like MNC Companies.

1. What is the rate of GST i have to charge on supply of food at my own premises/Restaurant.

2. What is the rate of GST i have to charge on supply of outdoor food supply to companies. (5% or 18%)

3. Can Purchaser Companies take a credit of GST and can reduced liability of GST on GST paid on purchase of Food.

Answer

1. As per Notification no. 11/2017- Central tax (Rate) GST on supply of food at restaurant premises is 5% if declared tariff is less than 7500/- and 18% if declared tariff is more than 7500/-.

2. If you are supplying food to outdoor customers like MNC Companies from your own premises then it will be treated as restaurant services and taxed as discussed above. But if you are supplying food from other than your own premises then it will be considered as Outdoor catering services and tax is leviable @ 18% as per Notification no. 11/2017- Central tax (Rate).

3. Credit is restricted under section 17(5) of CGST Act as follows:

(5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:'
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'(b) the following supply of goods or services or both:'

(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable
composite or mixed supply;
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Therefore if MNC companies are providing outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply to its employees then it will be treated as taxable supply and they are eligible to take credit.

We are enclosing herewith decision of Kerala Authority of Advance Ruling in case of M/s Caltech Polymers Pvt. Ltd.
The same should be applied if MNC is not charging any consideration from employees. The taxability is under Schedule I clause 2. (Reply dt.25/10/2018)