Service by outside canteen operators-Outdoor catering or Supply of Food

[ROHIT GOEL]

Hi Sir,

One of our client is a trust institution operating colleges. The institution has contracted with outside vendors for operating a canteen at its hostel premises wherein the vendors operate the kitchen, obtain all vegetables and thereafter also operate the hostel mess. The charges for such services are payable to the vendors on the basis of a fixed per meal charges. Charges for such hostel mess are collected from students upfront on lump sum basis.

My query is whether this would constitute service of outdoor catering by the outside vendor and hence chargeable to GST @18% or suuply of food items and chargeable to 5% without ITC.

Further, whether the institution needs to collect GST on such mess charges from the students in light of circular no. 28/02/2018-GST as per which 5% GST needs to be collected.

[Ravikumar muthusamy]

Institution has nothing to do with GST . Catering person has to take GST if TO exceeds 20L and to collect GST @5% without ITC. Hope I am correct.

[KASTURI SETHI]

Dear Querist,

I agree with Sh.Ravi Kumar Muthusami Ji. Here 'Vendor' is not proper word because his activity is not restricted to 'sale' only. He is performing multiple activities purchasing material, cooking etc. So called vendor is actually contractor-cum-outdoor caterer. His main activity is outdoor catering and conforms to the definition of 'supply' in GST.

[CASusheel Gupta]

Dear Rohit

In your case, the institution is collecting the charges from students and paying to the contractor on meal basis and the contractor is not collecting any amount from the students. As such the contractor is supplying to the institution and institution is supplying the the students (thought delivery to the students may be being done by the contractor) .

You need to refer to the corrigendum to the circular no. 28/02/2018-GST which clearly states that

(1) "If the catering services is one of the services provided by an educational institution to its students, faculty and staff and the said educational institution is covered by the definition given under para 2(y) of notification No. 12/2017-Central Tax (Rate), then the same is exempt."

If supply is done by contractor to the students that the same corrigendum states that

(2) If the catering services, i.e., supply of food or drink in a mess or canteen, is provided by anyone other than the educational institution, then it is a supply of service at entry 7(i) of notification No. 11/2017-CT (Rate) [as amended vide notification No. 46/2017-CT (Rate) dated 14.11.2017] to the concerned educational institution and attracts GST of 5% provided that credit of input tax charged on goods and services used in supplying the service has not been taken, effective from 15.11.2017.

Regards

CA Susheel Gupta

8510081001, 9811004443

AI Summary

Trust Institution's Canteen Services: Is It Outdoor Catering or Food Supply? GST Implications Under Review. A trust institution operating colleges has engaged outside vendors to manage a canteen at its hostel, charging students on a lump sum basis. The query concerns whether this arrangement constitutes outdoor catering, subject to 18% GST, or simply the supply of food, subject to 5% GST without input tax credit (ITC). Responses indicate that the vendor acts as a contractor-cum-outdoor caterer, and the institution's role in collecting charges from students suggests it supplies services to students. According to relevant GST circulars, if the institution provides catering as part of its services, it may be exempt from GST; otherwise, a 5% GST applies.