Catering services reclassified under GST Notification, now subject to 5% tax rate

The catering services provided by the applicant under both B2B and B2C models are classified as canteen services under Entry No. 7(i) or (iv) of Notification No. 11/2017, depending on the presence of air-conditioning or central air-heating facilities. As per the amended Notification No. 46/2017, these services fall under Entry No. 7(i), attracting a 5% GST rate.

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Issues Involved:
1. Classification of catering services under B2B and B2C models.
2. Determination of applicable GST rates under Notification No. 11/2017 and its amendments.

Detailed Analysis:

Issue 1: Classification of Catering Services under B2B and B2C Models

Applicant's Submission:
The applicant provides catering services to industries and corporates under two models:
- B2C Model: The applicant enters into contracts with companies to provide catering services directly to employees, who pay the applicant directly.
- B2B Model: The applicant contracts with companies to serve food and beverages to employees within the company premises, with the company paying the applicant.

The applicant currently classifies B2C services as canteen/restaurant services under Entry No. 7(i) of Notification No. 11/2017 and B2B services as outdoor catering services under Entry No. 7(v).

Applicant's Argument:
The applicant argues that both B2B and B2C services should be classified as canteen services. The applicant cites previous acceptance of their services as canteen services under the Service Tax regime and references dictionary definitions and circulars to support their claim. They argue that the nature of services has not changed under the GST regime, and thus, both models should be treated as canteen services.

Concerned Officer's Submission:
The officer contends that the applicant is providing outdoor catering services, as the services are rendered at a place other than the applicant's own. The officer references the definition of "outdoor caterer" under the Finance Act, 1994, and a judgment by the Allahabad High Court to support this classification.

Authority's Observation:
The authority examines the nature of the services provided and the contractual agreements with clients. They find that the applicant's services align more with canteen services, as they are provided within the premises of the client companies and involve facilities and arrangements typical of a canteen.

Issue 2: Determination of Applicable GST Rates

Applicable Legal Provisions:
- Notification No. 11/2017-Central Tax (Rate): Specifies GST rates for various services, including canteen and outdoor catering services.
- Amendments by Notification No. 46/2017: Modified the GST rates for canteen services.

Applicant's Argument:
The applicant argues that their services should be taxed at 5% under Entry No. 7(i) of Notification No. 11/2017, as amended by Notification No. 46/2017, which includes canteen services.

Concerned Officer's Submission:
The officer maintains that the services should be classified as outdoor catering, attracting an 18% GST rate under Entry No. 7(v).

Authority's Observation:
The authority reviews the amendments and finds that the services provided by the applicant fall under Entry No. 7(i) of Notification No. 11/2017, as amended. The authority notes that the amendments have clarified the classification of canteen services, and the applicant's services align with this classification.

Conclusion:
The authority concludes that the catering services provided by the applicant under both B2B and B2C models should be classified as canteen services under Entry No. 7(i) or (iv) of Notification No. 11/2017, depending on whether the canteen has air-conditioning or central air-heating facilities. As per the amended Notification No. 46/2017, the services fall under Entry No. 7(i), attracting a 5% GST rate.

Order:
The catering services provided by the applicant under both B2B and B2C models are classified as canteen services under Entry No. 7(i) or (iv) of Notification No. 11/2017, depending on the presence of air-conditioning or central air-heating facilities. As per the amended Notification No. 46/2017, these services fall under Entry No. 7(i).

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