Restaurant

[CS Kushwaha]

we have a canteen run in our factory by an out door caterer, what changes should be made in contract so that the canteen converts in restaurant (non AC) to avoid payment of service tax.kindly suggest.

[CASeetharaman KC]

Outdoor catering service would be attracted if the person who serves the food uses the premises provided by the company for serving the food to the employees.  If you want to convert the same into restaurant then you can probably look at a rental agreement of the premises with the caterer so that he prepares the food and serves the same at prices displayed on a menu card. Also it would be pertinent to note that the restaurant should be open to all people whether they are your employees or not, and if it is Non A/c then service tax should not be attracted. This would fall under the category of any other Non A/c restaurant which caters to any customer 

AI Summary

Non-AC restaurant status can avoid service tax if open to the public and operated under a rental with menu pricing. Outdoor catering service applies where the person serving food uses premises provided by the company to serve employees. To treat the facility as a restaurant, adopt a rental agreement with the caterer, have food sold at prices displayed on a menu card, and ensure the restaurant is open to the public; if the establishment qualifies as a non-AC restaurant catering to any customer, service tax on outdoor catering would not arise.