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2019 (3) TMI 1009 - AAAR - GSTRate of GST - outdoor catering - business of caterers and supply food, beverages and other eatables (nonalcoholic drinks) - complete services at various places of their customers, who have in house canteens at their factories - Circular issued from F.No. 354/03/2018 (Circular No. 28/02/2018-GST dated 08.01.2018) - 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 - challenge to AAR decision. Held that - The terms outdoor catering , restaurant , mess and canteen have not been defined in the CGST Act, 2017 and the GGST Act, 2017 or the Notifications issued there under. However, in the catering industry, the term outdoor catering refers to service wherein the kind, quantum and manner in which food / eatable/ drinks is to be served is decided by the service recipient and the service provider provides service of catering at the place other than his own. This meaning of outdoor catering has legal precedence as the term outdoor catering was specifically defined in Chapter V of the Finance Act, 1994. In the present case, the service recipient has engaged the appellant for running of the canteen and rates for the meal, snacks, tea have been fixed and payable by the service recipient. The menu is required to be decided by the canteen committee of the service recipient. Further, the appellant is providing these catering services from other than his own premises. Therefore, the nature of service provided by the appellant is that of outdoor catering service in view of the meaning of the said term as commonly understood, even though there is no statutory definition of the said term provided in the CGST Act, 2017 and the GGST Act, 2017. The issue whether the nature of service provided by the appellant would change since the meal, snacks, tea etc. are consumed by the workers / employees of the recipient, the AAR has referred to the judgement of Hon ble High Court of Allahabad in the case of Indian Coffee Workers Co-Op. Society Ltd. Vs. CCE ST, Allahabad 2014 (4) TMI 407 - ALLAHABAD HIGH COURT . In the said judgement, it has been held that the taxable catering service cannot be confused with who has actually consumed the food, edibles and beverages which are supplied by the assessee. It is also held that the taxability or the charge of tax does not depend on whether and to what extent the person engaging the service consumes the edibles and beverages supplied, wholly or in part. The situation where the food / eatables/ drink are the choice of the recipient and the kind, quantum and manner in which the food is to be served is also decided by the recipient, as is the issue in the present case, has not been covered by the said Circular and hence the same is not applicable in the facts of the present case - thus, the supply of services by the appellant 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 @ 18% (CGST 9% SGST 9%) and reject the appeal filed by M/s. Rashmi Hospitality Services Private Limited. AAR decision upheld.
Issues Involved:
1. Classification of services under GST. 2. Applicability of CBIC Circular dated 08.01.2018. 3. Licensing under the Food Safety and Standards Act, 2006. 4. Interpretation of terms like 'outdoor catering', 'mess', and 'canteen'. 5. Relevance of previous classifications and tax payments. Issue-Wise Detailed Analysis: 1. Classification of Services under GST: The primary issue is whether the services provided by the appellant fall under Sl. No. 7(i) or Sl. No. 7(v) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The appellant argued that their services should be taxed at 5% under Sl. No. 7(i), which pertains to services provided by a restaurant, eating joint, mess, or canteen. However, the Gujarat Authority for Advance Ruling (AAR) classified the services under Sl. No. 7(v) as 'outdoor catering', attracting an 18% GST rate. The AAR's decision was based on the nature of the services provided, where the appellant catered food at the recipient's premises, which aligns with the meaning of 'outdoor catering' as commonly understood and defined in the erstwhile Chapter V of the Finance Act, 1994. 2. Applicability of CBIC Circular dated 08.01.2018: The appellant contended that the CBIC Circular dated 08.01.2018 clarified that mess or canteen services outsourced to a third person would be covered under Serial No. 7(i) with a 5% tax rate. However, the appellate authority found that this circular specifically addressed services in educational institutions, not industrial canteens. Thus, the circular's clarification was not applicable to the appellant's case, where the food and service specifics were decided by the recipient, fitting the 'outdoor catering' category. 3. Licensing under the Food Safety and Standards Act, 2006: The appellant argued that their FSSAI license was for operating a club/canteen, not for outdoor catering. They claimed that this licensing should influence the GST classification. However, the appellate authority held that the licensing category under the Food Safety and Standards Act does not affect the taxability under GST. The nature of the service provided, as interpreted under the GST law, remains the determining factor. 4. Interpretation of Terms like 'Outdoor Catering', 'Mess', and 'Canteen': The terms 'outdoor catering', 'mess', and 'canteen' are not defined in the CGST Act, 2017, or the GGST Act, 2017. The authority referred to the common industry understanding and previous legal definitions. 'Outdoor catering' involves providing food services at the recipient's premises as per their requirements. The appellant's services matched this description, as they provided catering at the client's factory canteen, with the menu and prices decided by the client's canteen committee. 5. Relevance of Previous Classifications and Tax Payments: The appellant also argued that their previous classification and tax payments at 18% should not influence the current interpretation. The appellate authority agreed that there is no estoppel in law regarding fiscal statutes. However, the consistent nature of the services provided and their alignment with the 'outdoor catering' definition under the GST law justified the classification under Sl. No. 7(v). Conclusion: The appellate authority confirmed the AAR's ruling that the appellant's services fall under Sr. 7(v) of Notification No. 11/2017-Central Tax (Rate), attracting an 18% GST rate. The appeal filed by M/s. Rashmi Hospitality Services Private Limited was rejected, affirming the classification of their services as 'outdoor catering'.
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