GST Ruling: Food at 2.5% & Transport at 18% - Clarification on Diverse Service Tax Implications

The Authority for Advance Rulings determined that the supply of food in canteens by M/s. Prism Hospitality Services was subject to a GST rate of 2.5% CGST + 2.5% SGST, while their transportation services attracted 18% GST. The ruling clarified the tax implications for the diverse services provided by the applicant based on the specific nature of each activity, emphasizing the distinction in GST rates for different services offered.

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Issues Involved:
1. Advance Ruling sought on the rate of GST to be levied on various activities related to supply of food and transportation services.

Analysis:

1. Background and Application: M/s. Prism Hospitality Services filed an application seeking Advance Ruling on the GST rate for their services. They are engaged in providing cleaning services, maintaining canteens, and supplying food to various organizations since 2005. The application covered activities like canteen services, food supply to training institutions, student mess operations, and transportation services.

2. Classification of Services: The applicant's services were categorized under the Notification No.13/2018-Central Tax(Rate) dated 26.7.18. This notification specified the rate of GST for the supply of food in canteens of offices, factories, hospitals, colleges, etc., on a contractual basis. The applicable rate was determined to be 2.5% CGST + 2.5% SGST without eligibility for input tax credit.

3. Educational Institutions' Mess Facility: A clarification by CBEC highlighted that the supply of food or drink by a mess or canteen in educational institutions is taxable at 5% without Input Tax Credit. This rate applied whether the service was provided by the institution itself or outsourced to a third party.

4. Composite Supply: Regarding the transportation of food along with the supply of food, it was deemed a composite supply with two components - supply of food and transportation service. As per Section 8 of the CGST Act, the tax liability for a composite supply is determined based on the principal supply. In this case, the principal supply being outdoor catering service, the entire transaction attracted 18% GST, the highest applicable rate.

5. Ruling and Conclusion: The Authority for Advance Rulings concluded that the supply of food in canteens and the transportation services provided by the applicant fell under different GST rates. While the former was taxable at 2.5% CGST + 2.5% SGST, the latter was subject to 18% GST. The ruling clarified the tax implications for the applicant's diverse range of services based on the specific nature of each activity.

This detailed analysis of the judgment provides a comprehensive understanding of the issues addressed by the Authority for Advance Rulings in determining the GST rates applicable to the services provided by M/s. Prism Hospitality Services.

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