TaxTMI 
TaxTMI 
I am going to start Online food delivery / Mobile catering services in trains in Gujarat State. My turnover of this service may go to around 26 lakhs per annum, so i have to pay vat / sale tax and service tax on these supplies. I have a doubt whether vat will be applicable only on food item amount which is currently in gujarat is 15% (12.5%+2.5%) and service tax will be applicable only on food items @ 9 %. (Considering 40 % abatment on outdoor catering). Please suggest if my thinking is not as per legal provisions. Thanks in advance.
Vat on food items delivered in trains
12 Mar 2017 
5 Replies 
3039 Views Asked by
Service tax on outdoor catering applies to the service portion of food supplies, potentially alongside state VAT.
Food supplied as outdoor catering in trains involves two tax elements: state VAT on the goods element (the food) and service tax on the service portion of the total charge determined by the statutory valuation mechanism for outdoor catering. Characterisation disputes may arise where only delivery occurs, and cenvat credit eligibility is restricted for certain inputs, requiring separate accounting for VAT, service tax and input credit treatment. (AI Summary)
Food supplied as outdoor catering in trains involves two tax elements: state VAT on the goods element (the food) and service tax on the service portion of the total charge determined by the statutory valuation mechanism for outdoor catering. Characterisation disputes may arise where only delivery occurs, and cenvat credit eligibility is restricted for certain inputs, requiring separate accounting for VAT, service tax and input credit treatment. (AI Summary)