2018 (5) TMI 1181 - AAR - GST

Classification of catering services by M/s. Rashmi Hospitality under GST; 18% tax rate confirmed

The Authority for Advance Ruling concluded that the services provided by M/s. Rashmi Hospitality Services Private Limited fall under Sr. No. 7(v) of ... Outdoor caterer - Classification under Heading 9963 - Accommodation, food and beverage services - Supply of services in canteen and similar establishments (Chapter Heading 996333) - Supply of food by a caterer to a recipient notwithstanding consumption by recipient's employees - Applicability of Circular No. 28/02/2018-GST (college hostel mess clarification)Outdoor caterer - Classification under Heading 9963 - Accommodation, food and beverage services - Applicability of Circular No. 28/02/2018-GST (college hostel mess clarification) - Appropriate GST classification and rate on services supplied by the applicant for running an in-house canteen at the client's premises (whether covered by Sr. No. 7(i) or Sr. No. 7(v) of Notification No. 11/2017-Central Tax (Rate)). - HELD THAT: - On a plain reading of the agreement the applicant, a caterer, was engaged to run the canteen on the client's premises, with menu fixed by the client's canteen committee and consideration payable by the recipient as per card punches and per item rates. The services are provided at a place other than the caterer's own premises and therefore fall within the concept of an outdoor caterer. The fact that meals are consumed by the recipient's employees does not change the nature of the service, since taxability depends on whether the catering service is provided to the recipient and not on who actually consumes the food. Consequently the Circular No. 28/02/2018-GST relating to college hostel messes does not apply to the arrangement in question. Having regard to the entries under Heading 9963 of Notification No. 11/2017-Central Tax (Rate), the activity is in the nature of outdoor catering and is classifiable accordingly. [Paras 8, 9, 10]The supply of services by the applicant is classifiable as outdoor catering under the Notification and attracts GST @ 18% (CGST 9% + SGST 9%).Final Conclusion: The Authority ruled that the applicant's services for running the client's canteen are classifiable as outdoor catering under Notification No. 11/2017 (as amended) and attract GST at 18% (CGST 9% + SGST 9%). Issues Involved:1. Appropriate rate of Goods and Services Tax (GST) applicable on the services provided by the applicant.2. Classification of the services provided by the applicant under the GST regime.Detailed Analysis:1. Appropriate Rate of GST:The applicant, M/s. Rashmi Hospitality Services Private Limited, provides catering services to various customers, including those with in-house canteens at their factories. The applicant typically charges GST at 18%, classifying their services under heading 9963 as outdoor catering. However, one customer requested the applicant to charge GST at 12%. The applicant sought an advance ruling to determine whether the applicable GST rate should be 12% or 18%.The applicant referred to a clarification issued by the Tax Research Unit, Department of Revenue, which suggested a GST rate of 5% for services provided in statutory canteens maintained under law. The applicant questioned whether this clarification applied to them and what the tax rate should be before and after the said notification.The Goods and Services Tax and Central Excise Commissionerate, Kutch (Gandhidham), indicated that the services provided by the applicant fall under Chapter Heading 996333, which pertains to food, edible preparation, and beverage serving services, attracting a GST rate of 18%.2. Classification of Services:The core issue was whether the applicant's services should be classified under Sr. No. 7(i) of Notification No. 11/2017-Central Tax (Rate) as services provided by a restaurant, eating joint, including mess, canteen, or under Sr. No. 7(v) as outdoor catering services.The agreement between the applicant and the client required the applicant to run the canteen, supplying snacks, tea, lunch, and dinner to the employees/workers. The company would pay the applicant based on the canteen meal availed. The menu was to be decided by the canteen committee.The Authority for Advance Ruling examined whether the services provided by the applicant were in the nature of services provided by a restaurant, eating joint, including mess, canteen, or as part of outdoor catering. The agreement indicated that the applicant was engaged to run the canteen for the client's workers/employees, with fixed rates for meals, snacks, and tea. The applicant provided services from a place other than their own premises, making it an outdoor catering service.The Authority concluded that the nature of the service provided by the applicant was that of outdoor catering, not services provided by a restaurant, eating joint, including mess, canteen. Therefore, the clarification issued in Circular No. 28/02/2018-GST dated 08.01.2018 was not applicable.Ruling:The Authority for Advance Ruling determined that the supply of services by M/s. Rashmi Hospitality Services Private Limited is covered under Sr. No. 7(v) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended, attracting GST at 18% (CGST 9% + SGST 9%).