GST classification of factory canteen services depends on recipient control and supply location, supporting outdoor catering treatment.

GST classification of a factory canteen turns on the character of the supply and the recipient's control over the service. Where the recipient fixes the menu, meal rates and supply arrangement, and the food service is rendered from premises other than the supplier's own, the arrangement is treated as outdoor catering rather than a lower-rated canteen service. The consumer of the food, whether employees or others, does not change the classification. Licensing under food safety law and canteen obligations under factory law do not determine GST treatment, and a hostel-mess circular does not apply to a recipient-controlled catering arrangement.

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Issues: Whether the services of running a factory canteen and supplying food, beverages and other eatables were classifiable under entry 7(i) as canteen service or under entry 7(v) as outdoor catering service, and whether the applicable GST rate was 5% or 18%.

Analysis: The relevant GST notifications did not define "outdoor catering", "mess" or "canteen". The Authority applied the common understanding of outdoor catering as a service where the recipient s the kind, quantity and manner of supply and the service is provided at a place other than the supplier's own premises. On the facts, the recipient engaged the appellant to run the canteen, fixed the menu and meal rates, and the appellant rendered the service from premises other than its own. The fact that the food was consumed by the recipient's employees did not alter the character of the supply. The license issued under the Food Safety and Standards Act, 2006 and the requirement under the Factories Act, 1948 were held irrelevant to GST classification. The circular concerning college hostel mess fees did not apply because the present arrangement involved recipient-controlled catering, not the exempt educational-institution scenario.

Conclusion: The service was correctly classified as outdoor catering under entry 7(v) of the GST notifications and attracted GST at 18%.

Final Conclusion: The appeal failed and the advance ruling classifying the supply as outdoor catering was affirmed.

Ratio Decidendi: Where the recipient controls the nature of food service, fixes the menu and supply arrangement, and the service is rendered from premises other than the supplier's own, the supply falls within outdoor catering rather than a lower-rated canteen entry, regardless of who ultimately consumes the food.

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