GST Applicability to Food Programs & Supply of Goods: Ruling on Mid-Day Meal & Anganwadi Programs

The ruling determined that the preparation and serving of food under the Mid-Day Meal Program and Anganwadi meals program, the transfer of goods/capital equipment between different kitchens, and the sale of scrap items generated during the Mid-Day Meal program are considered supplies under the CGST/RGST Act, 2017. The activities fall within the scope of supply as per Section 7 of the Act, subject to GST, except for the Mid-Day Meal program which is taxed Nil under specific notification.

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Issues Involved:
1. Whether the preparation and serving of food under the Mid-Day Meal (MDM) Program and Anganwadi meals program is considered a supply under GST.
2. Whether the transfer of goods/capital equipment between different kitchens of the applicant is considered a supply under GST.
3. Whether the sale of scrap items generated during the Mid-Day Meal program is considered a supply under GST.

Issue-wise Detailed Analysis:

1. Preparation and Serving of Food under Mid-Day Meal and Anganwadi Meals Program:
The applicant, a charitable trust registered under section 12AA of the Income Tax Act, 1961, implements the Mid-Day Meal Scheme in government and government-aided schools to eliminate classroom hunger and support the right to education for socio-economically disadvantaged children. The applicant operates 38 kitchens across 12 states and is reimbursed by the government for cooking costs and transportation charges. The Ministry of Human Resources Development prescribes a Model MOU for partnering with NGOs for this purpose.

The applicant argued that their activities should not be considered a supply under GST. However, the ruling observed that the applicant receives conversion charges from the government for cooking meals, which constitutes a business activity as per Section 2(17) of the CGST Act. The ruling also noted that the activities of the applicant do not fall under the definition of "charitable activities" as per Notification No. 12/2017 Central Tax (rate) dated 28.06.2017. Consequently, the preparation and serving of food under the Mid-Day Meal and Anganwadi meals program is considered a supply under Section 7 of the CGST Act, 2017. However, the Mid-Day Meal program is taxed Nil by virtue of Notification No. 12/2017 mentioned at serial number 66 heading number 9962.

2. Transfer of Goods/Capital Equipment between Different Kitchens:
The applicant transfers goods such as spices, food grains, kitchen equipment, and distribution vehicles between its kitchens located in different states. These kitchens are registered under GST and are considered "distinct persons" for GST purposes. The ruling determined that such transfers are covered under the definition of supply as per Section 7 of the CGST/RGST Act, 2017, and thus, are subject to GST.

3. Sale of Scrap Items Generated during Mid-Day Meal Program:
During the Mid-Day Meal program, the applicant generates scrap items such as empty oil tins, pipes, iron, plastic items, and spare parts, which are sold from time to time. The sale proceeds of these items are recorded as miscellaneous income in the books of accounts. The ruling concluded that the sale of scrap items is an activity of sale for consideration and is covered under the definition of supply as per Section 7 of the CGST/RGST Act, 2017.

Ruling:
A. The preparation and serving of food to children of government schools under the Mid-Day Meal Program and serving of food under the Government-sponsored Anganwadi meals program is covered under the scope of supply as per Section 7 of the CGST/RGST Act, 2017.
B. The transfer of goods/capital equipment exclusively used for the Mid-Day Meal program and Anganwadi meals program between different kitchens of the applicant, which are distinct persons as per GST law, is covered under the scope of supply as per Section 7 of the CGST/RGST Act, 2017.
C. The sale of scrap items generated during the Mid-Day Meal program is an activity of sale and thus covered under the scope of supply as per Section 7 of the CGST/RGST Act, 2017.

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