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GST Applicable on Outsourced Hospital Food Supply: Ruling Clarifies Tax Rates & Input Credits The ruling concluded that GST is chargeable on the supply of food to hospitals when provided on an outsourcing basis. The applicable tax rates are 18% ...
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The ruling concluded that GST is chargeable on the supply of food to hospitals when provided on an outsourcing basis. The applicable tax rates are 18% (CGST 9% + SGST 9%) from 01.07.2017 to 26.07.2018, and 5% (CGST 2.5% + SGST 2.5%) from 27.07.2018 onwards, subject to the condition that input tax credit is not taken. Hospitals cannot recover GST already paid from future bills due to the chargeability of GST on these services.
Issues Involved 1. Classification of services rendered by the applicant. 2. Applicability of GST on the supply of food to hospitals. 3. Rate of GST applicable on the supply of food to hospitals. 4. Recovery of GST already paid by hospitals from future bills.
Detailed Analysis
1. Classification of Services Rendered by the Applicant The applicant is engaged in supplying food and beverages at the canteen of hospitals. The services are classified under Service Code No. 9963. The applicant manages the canteen facilities and receives payments from hospitals, not directly from consumers.
2. Applicability of GST on the Supply of Food to Hospitals The ruling examined relevant notifications and circulars, including Notification No. 12/2017 and Circular No. 32/06/2018. It was determined that the exemption under entry 74 of Notification No. 12/2017 applies only when the clinical establishment itself provides food as part of healthcare services to in-patients. Since the applicant supplies food based on a contractual arrangement with hospitals, GST is payable on these services.
3. Rate of GST Applicable on the Supply of Food to Hospitals The rate of GST was analyzed based on various notifications and amendments: - From 01.07.2017 to 26.07.2018: The supply of food by the applicant falls under entry 7(v) of Notification No. 11/2017, attracting a tax rate of 18% (9% CGST + 9% SGST). - From 27.07.2018 onwards: Following the 27th GST Council Meeting, the supply of food to hospitals is classified under entry 7(i) of Notification No. 11/2017, attracting a tax rate of 5% (2.5% CGST + 2.5% SGST) with the condition that input tax credit is not available.
4. Recovery of GST Already Paid by Hospitals from Future Bills The ruling clarified that if no GST is chargeable, the GST already paid by hospitals and remitted to the government is recoverable from future bills. However, since GST is chargeable, this provision does not apply.
Conclusion The ruling concluded that GST is chargeable on the supply of food to hospitals. The applicable tax rates are: - From 01.07.2017 to 26.07.2018: 18% (CGST 9% + SGST 9%). - From 27.07.2018 onwards: 5% (CGST 2.5% + SGST 2.5%) provided that input tax credit is not taken.
Ruling - Q1: Whether GST is chargeable on the food supplied to hospitals on outsourcing basisRs. Ans: Yes. - Q2: If no GST is chargeable, is the GST already paid by hospitals recoverable from future billsRs. Ans: For the period from 01.07.2017 to 26.07.2018, the rate is 18% (CGST 9% + SGST 9%). For the period from 27.07.2018 onwards, the rate is 5% (CGST 2.5% + SGST 2.5%) provided that input tax credit is not taken.
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