2022 (7) TMI 1102 - AAR - GST

Cooperative society canteen services split into manpower supply at 18% GST and restaurant services at 5% GST rates

In Re: M/s Indian Coffee Workers' Cooperative Society Limited.

The AAR Rajasthan ruled on classification of services provided by a cooperative society operating a canteen at NTPC premises. The authority held that ... Classification of services - Restaurant Service or Outdoor Catering Service - providing services relating to supply of food to the employees of NTPC Anta at the premises rented from them - rate of tax applicable, for providing such services, on consideration received from NTPC - rate of tax applicable, for providing such services, on consideration received in the form of sale of food items to the employees/workers/others - HELD THAT:- A fixed amount is paid by the NTPC for running and maintenance of canteen. Balance is recovered from those procuring food from the canteen. On the behalf of M/s Indian Coffee “Workers’ Cooperative Society Limited, Mumbai, Shri K. B. Sanjayan, Manager, M/s Indian Coffee House, NTPC, Anta, Rajasthan has acknowledged the aforesaid Service Purchase Order by making signature as Authorised Signatory over it in token of acceptance of the same. Further, on perusal of ‘Bill of Quantity’ and S. No. 16, 21 & 24 of the Service Purchase Order dated 28.09.2021, it is find that applicant has provided manpower i.e. Manager, clerk, cook, cleaner, helper etc. for running & maintenance of the canteen at NTPC, Anta for a consideration amounting to Rs. 68,45,452/- for a period of 10 months. The activity undertaken by the applicant is covered under ‘Supply’ as defined under Section 7 (1) of the GST Act, 2017 - the activity of supply of manpower service for running & maintenance of the canteen for consideration in the course of business is covered under ‘supply’ as per section 7 of the CGST Act, 2017 and liable to tax as per section 9 of the CGST Act, 2017. The service provided by the applicant is neither classifiable as Restaurant Service nor Outdoor Catering Service, rather it is classifiable as Temporary staffing services under heading No. 998514 and attracts GST @ 18% as per S. No. 23 (iii) of the Notification No. 11/2017-CT (Rate) dated 28.06.2017 (as amended). Applicable tax rate on the supply made by the applicant - HELD THAT:- In the instant case supply made by the applicant is classifiable under Chapter, Section or Heading 998514 under SI. No 23(iii) of Notification No. 11/2017-CT (Rate) dated 2S.06.2017 as amended time to time and is taxable at the rate of @ 18%. Rate of tax applicable, for providing services, on consideration received in the form of sale of food items to the employees workers others - HELD THAT:- In the present case the canteen is not located in any premises having ‘hotel accommodation’ services. Rather is it situated at premises of NTPC on a contractual agreement on rent. Hence the case of the applicant is not covered in exclusion in respect of item (ii) of serial number 7 of the table of the said notification No. 11/2017-CT(R) dated 28.06.2017. As far as relevancy of “Outdoor catering” in respect of applicant’s services is concerned, it crystal clear that the supply being undertaken by the applicant is not event based or occasional in nature which is evident from the agreement which provides for the operation of the agreement for a period of 10 months. Thus, the activities of selling articles for human consumption at pre-decided rates to the employees of the recipient at canteen of NTPC, Anta by the applicant would be fall under the ‘restaurant service’ and are classifiable under HSN 9963 under SI. No. 7(ii) of Notification No. 11/2017-CT (Rate) dated 28.06.2017 as amended time to time and attract 5% GST provided that credit of input tax charged on goods and services used in supplying the service has not been taken. Issues Involved:1. Classification of the service provided by the applicant.2. Applicable rate of tax on consideration received from NTPC.3. Applicable rate of tax on consideration received from the sale of food items to employees/workers/others.4. Clarification on the correct nature of service and applicable rate of tax if the above questions are not answered affirmatively.Detailed Analysis:Issue 1: Classification of the Service Provided by the Applicant- Applicant's Submission: The applicant, M/s Indian Coffee Workers' Cooperative Society Limited, provides plant canteen services at NTPC Anta, supplying food to NTPC employees. They argue that their services fall under 'Restaurant Service' as per Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017, attracting GST @ 5%.- Authority's Analysis: The applicant's service involves supplying manpower for running and maintaining the canteen, which includes managing staff like managers, cooks, and cleaners. This service is classified under 'Temporary staffing services' (HSN 998514) as it involves supplying personnel for temporary work assignments.- Conclusion: The service provided by the applicant is classified as 'Temporary staffing services' under heading No. 998514 and attracts GST @ 18% (9% CGST + 9% SGST).Issue 2: Applicable Rate of Tax on Consideration Received from NTPC- Applicant's Submission: The applicant contends that the applicable tax rate should be 5% (2.5% CGST and 2.5% SGST) based on their classification under 'Restaurant Service.'- Authority's Analysis: Given that the service is classified under 'Temporary staffing services,' the applicable tax rate is determined by Notification No. 11/2017-CT (Rate) dated 28.06.2017, which states an 18% GST rate for such services.- Conclusion: The applicable tax rate for the service provided to NTPC is 18% (9% CGST + 9% SGST).Issue 3: Applicable Rate of Tax on Consideration Received from Sale of Food Items- Applicant's Submission: The applicant believes the rate of tax should be 5% (2.5% CGST and 2.5% SGST) for the sale of food items to employees/workers.- Authority's Analysis: The sale of food items to employees/workers at pre-decided rates falls under 'Restaurant Service' as defined in Notification No. 11/2017-CT (Rate) dated 28.06.2017. This service is classified under HSN 9963 and attracts GST @ 5%.- Conclusion: The rate of tax applicable for the sale of food items to employees/workers is 5% (2.5% CGST + 2.5% SGST).Issue 4: Clarification on Correct Nature of Service and Applicable Rate of Tax- Applicant's Request: If the above questions are not answered affirmatively, the applicant seeks clarification on the correct nature of service and applicable rate of tax.- Authority's Conclusion:- The service of supplying staff to NTPC is classified as 'Temporary staffing services' under Heading No. 998514 and attracts GST @ 18%.- The sale of food items to employees/workers is classified under 'Restaurant Service' and attracts GST @ 5%.Ruling:1. Classification of Service: The service provided by the applicant is classified as 'Temporary staffing services' under heading No. 998514, attracting GST @ 18%.2. Rate of Tax on Consideration from NTPC: The applicable rate of tax is 18% (9% CGST + 9% SGST).3. Rate of Tax on Sale of Food Items: The applicable rate of tax is 5% (2.5% CGST + 2.5% SGST).4. Clarification on Service Nature and Tax Rate: As per the above conclusions, the services are classified and taxed accordingly.