Question 31: A is a owner of a restaurant area and registered under GST. A has given contract to a caterer B for catering of food in his restaurant. Restaurants are to charge 5 % as per notification 46/2017 without input. The caterer is to charge 18% GST (if I am correct). Questions a) Will the caterer in this case will be considered as outdoor caterer or a deemed restaurant. b) Should the caterer giving service to a restaurant be charging 18% or 5% c) The charging of 18% by caterer has increased cost of restaurant owner as it cannot claim input so is there any legal valid alternative to reduce this cost increased by non use of input of caterer

Answer a) There is no any term 'Deemed restaurant' in GST. Caterer providing service to restaurant will be considered as Outdoor caterer.

b) Caterer giving service to restaurant will charge GST @ 18% vide Notification No. 11/2017- Central Tax (Rate) s. no. 7(v).

c) There is no remedy available to restaurant to claim input of caterer.
This is clarified in Explanation to s.no. 7(ix) reproduced below:

Explanation.- For the removal of doubt, it is hereby clarified that, supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or drink, where such supply or service is for cash, deferred payment or other valuable consideration, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied, other than those located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent shall attract central tax @ 2.5% without any input tax credit under item (i) above and shall not be levied at the rate as specified under this entry . (Reply dt. 05/29/2018)