2018 (10) TMI 1052 - AAR - GST

Application for withdrawal of advance ruling application - Whether entry 7 (i) covers canteens located in any establishment and Circular No. 28/02/2018-GST applies to canteens located in any type of establishment and liable to 5% GST vide Notification No. 11/2017-CT (Rate) as amended vide notification No. 46/2017-CT (Rate) dated 14.11.2017? The application filed by the Applicant for advance ruling is dismissed as withdrawn.

Summary

Issues:
1. Clarification on the applicability of GST rates for canteens.
2. Interpretation of GST provisions for catering services.
3. Compliance with GST circulars regarding canteens in different establishments.
4. Constitutional validity of GST rates for canteens in various establishments.

Analysis:
1. The case involved seeking clarification on the GST rates applicable to canteens, specifically regarding entry 7(i) and Circular No. 28/02/2018-GST. The applicant, engaged in catering services, sought to understand the implications of the GST rate change from 18% to 5% for canteens not located in high tariff rooms. The applicant highlighted concerns about the correct tax rate application due to potential financial impacts.

2. The applicant operated under three legal entities providing catering services to corporate customers and retail services. The discussion revolved around the distinction between indoor and outdoor catering services, emphasizing the continuous nature of food provision in canteens, cafeterias, etc. Reference was made to the Supreme Court's decision on outdoor catering, emphasizing personalized service in outdoor catering compared to the sale of food in restaurants.

3. The applicant raised concerns about the Circular No. 28/02/2018-GST, arguing that the differentiation in GST rates for canteens of educational institutions and other establishments was discriminatory. They cited the violation of Article 301 of the Constitution, emphasizing the need for uniformity in GST rates for canteens across various establishments to avoid discrimination in tax structures.

4. The applicant's submission highlighted the impact of Notification No. 13/2018-Central Tax (Rate) on the GST rates for canteen services, leading to a request to withdraw the Advance Ruling Application. The amendment in GST rates for canteen services under entry 7(i) and 7(v) prompted the applicant to withdraw the application before the authority.

Ruling:
The Authority for Advance Ruling dismissed the application as withdrawn following the issuance of Notification No. 13/2018-Central Tax (Rate) amending the GST rates for canteen services. The ruling reflects the impact of legislative changes on the applicant's query regarding the applicable GST rates for canteens, ultimately resulting in the withdrawal of the advance ruling application.