Providing Mess Services in a Boarding School

[Devendra Agarwal]

Is VAT applicable on contract for running a mess (providing all meals on regular basis) - catering service  in Boarding School/College (it already included in negative list of services tax being an auxilliary service)?

[YAGAY and SUN]

You are liable to get registration certificate under KVAT Act, if

1. The taxable turnover exceeds is likely to exceed Rs. 5 lacs at any time during the financial year, or
2. If taxable turnover exceeds Rs. 40000/- in any one month.

and accordingly you would have to pay the tax.

Further,  in the Negative list it is mentioned that catering for students in any mid day meal scheme sponsored by the Government will be exempted for levy of service tax.  If your services falls under this category then it is exempted otherwise not.

 

[Devendra Agarwal]

Tks dear.

Notification No. 25/-ST 2012 dated 20.6.2012 Section 68 of Finance Act, 1994 Item No. 9 provides services to or by educational institutions in respect of education exepmpted from Service Tax by way of Auxiliary Education  or Renting of Immovable Properties Services. The term auxiliary services in Section 66F include include services like providing dwelling units (hostel) for residence and food as bundeled services. Therefore exemption under service tax is hardly in doubt.

However providing mess services in the hostel which would include providing cooked food is consdered sale like a food in a resturant or not is the question. May please reconfirm/deliberate if this transaction would constitute a sale of food in terms of VAT Act under KVAT in case the total expenditure by the mess exceeds Rs. 40,000 per month or Rs. 5 Lac in a year?

Regards:  

AI Summary

VAT applicability on boarding school mess services: registration and tax depend on sale versus service characterisation.
Whether regular provision of cooked meals by a boarding school mess constitutes a taxable supply under the KVAT Act turns on registration thresholds and the legal characterisation of the transaction as a sale of goods versus an exempt auxiliary educational service; if the catering falls outside educational or government-sponsored exemptions and is treated as a sale akin to restaurant supply, VAT liability and registration obligations under KVAT follow.