Catering service or Restaurant Service

[ROHIT GOEL]

One of our client has been appointed as a food contractor by a club. Supply by our client to a club will be based on actual orders placed by customers of club. Payments from customers will be charged by a club and GST @ 5% has been charged in invoice considering it as a restaurant services.

Our client will raise invoice to club at the end of month for the supplies made by him.

Issue that arises is whether services provided by our client are catering service @18% or restaurant services @5%.

[KASTURI SETHI]

It is outdoor catering service HSN 996334.

[YAGAY andSUN]

In addition to above reply please check whether your client have been granted a FBO License from FSSAI or not.

[Rajagopalan Ranganathan]

Sir,

According to Sl,. No. 7 (9963 (iii) of Notification No. 11/2017 -Central Tax (Rate) dated 28.6. 2017 as amended Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink, where such supply or service is for cash, deferred payment or other valuable consideration, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied, located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent. are chargeable @ 9% towards CGST.

[YAGAY andSUN]

Outdoor Catering Service Taxable at 18% GST: AAR.

The Gujarat Authority for Advance Ruling, recently held that the supply of service provided by the applicant is in nature of ‘outdoor catering ’ and is liable to GST at the rate of 18%. The Applicant, M/s. Rashmi Hospitality Services Private Limited, is an industrial canteen contractor who provides cantering services to manufacturing industries at various places of their customers who have in house canteens at their factories. The applicant normally charges Goods & Services Tax at the rate of 18% classifying their services under heading 9963 as outdoor catering. One of the customer of the applicant asked the applicant to charge GST at the rate of 12%. The applicant has sought a clarification regarding the rate of taxability, before the AAR.

[KASTURI SETHI]

M/s. Yagay and SUN,. Sir, Experts' view stands upheld by AAR.

[Mahir S]

Yes, as per the recent judgement discussed above, such services are to be charged at 18 %.

The AAR relying on the decision of the Allahabad High Court in the case of Indian Coffee Workers’ Co-Op Society Ltd vs. CCE & ST. (2014 (4) TMI 407 - ALLAHABAD HIGH COURT) held that the supply of services by M/s. Rashmi Hospitality Services Private Limited (2018 (5) TMI 1181 - AUTHORITY FOR ADVANCE RULING - GUJARAT) is covered under Sr. 7(v) of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 as amended, issued under the Central Goods and Services Tax Act, 2017 and Notification No. 11/2017-State Tax (Rate) dated 30.06.2017, as amended, issued under the Gujarat Goods and Services Tax Act, 2017, attracting Goods and Service Tax at the rate 18%.

AI Summary

Outdoor catering service classification leads to standard GST treatment under notification, not concessional restaurant rate. Services by a food contractor supplying food to a club based on customers' orders are to be classified by reference to GST notification entries under heading 9963; Gujarat AAR has held comparable industrial canteen supplies to be outdoor catering taxable at the standard GST rate, and reliance on precedent supports treating such contractor provided canteen/catering services as outdoor catering rather than concessional restaurant services. Check FBO/FSSAI licensing and invoice/tax treatment accordingly.