APPLICABILITY OF SERVICE TAX ON CANTEENS IN HOSPITAL

[CS RAHUL AGARWAL]

Sir / Experts,

is there any notification for the canteen run in hospitals whether or not government ? Please throw your valuable advice / opinion.

[Rajagopalan Ranganathan]

Sir,

Normally in canteens maintained by the hospitals food will be cooked in the canteen itself. Similarly beverages are also prepared in the canteen itself. Under finance Act, 1994 only outdoor caterers are subject to service tax. since in hospital canteens food is prepared there itself no service tax can be levied on hospital canteens under the head outdoor caterers

[Ravikumar muthusamy]

I think it comes under Restaurant services and so service tax willbe applicable if aircondition is provided

pls confirm

[CS RAHUL AGARWAL]

With due respect to learned members and their valuable opinion, i would like to elaborate this issue a little extensively.

There could be 2 situation.

1. Canteen service managed and provided by hospital themselves without outsourcing. In this case, the service would be Restaurant Service.if they have extended air-conditioning in any part. restaurant service read as:

(zzzzv) to any person, by a restaurant, by whatever name called, having the facility of air-conditioning in any part of the establishment, at any time during the financial year, ............................................................

So if the hospital are providing meals/eatables to their premise to be used in generally by all person be it staffs, patients, guests, visitors etc then it should be classified as restaurant service provider.

2. The other could be the case where the canteen is provided, run, nd managed by a outsourced contractor. In this case it would be outdoor-catering service. It read as:

"outdoor caterer" means a caterer engaged in providing services in connection with catering at a place other than his own but including a place provided by way of tenancy or otherwise by the person receiving such services

So here undoubtedly if the outdoor contractor is engaged by the hospital, which have let its premise/space for providing catering to the contractor caterer, it would be well & good within "Outdoor-catering"

I hope with my limited knowledge and application of understanding, we can conclude it if acceptable by learned. Further discussion or contrary opinion highly solicited. Thanks to all :)

[KASTURI SETHI]

I agree with Sh.Raul Agarwal in toto.

[Ganeshan Kalyani]

Nicely explained by Mr. Agarwal

AI Summary

Service tax classification for hospital canteens depends on operation: hospital run restaurant service with air conditioning; outsourced outdoor catering.
Classification of service tax for hospital canteens depends on operation and facilities. If the hospital itself operates the canteen and provides meals on its premises, the activity is classified as Restaurant Service if air conditioning is available in any part of the establishment. If an outsourced contractor runs the canteen in hospital premises, the activity is characterised as Outdoor Catering because the caterer provides services at a place other than his own, including premises provided by the service recipient.