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2020 (8) TMI 104 - AAR - GSTLevy of GST - supply of food by the applicant to hospitals on outsource basis - health care services provided by a clinical establishment and food supplied to the patients - Circular No.32/06/2018-GST, dt. 12-022018 at Si. No. 5(3) - HELD THAT - In the case at hand, the Applicant is engaged in supplying food and beverages at the canteen of their customers. The Applicant himself does not get paid for by the consumers of the food and beverages. The Recipient of the services are hospitals who enter into contract with the applicant. The charges are received from the hospitals on monthly basis on the coupons collected. In short, it is deciphered that the Applicant is vested with management of the canteen facilities. Supply of food is classified under Service Code No. 9963. We have examined the relevant notifications providing exemption to services and found that the services rendered by the applicant are not taxable. The exemption is available as per the entry of the above notification only when the clinical establishment itself provides this service (supply of food) as a part of health care services to the in-patients and the same is not available, when such supply of food and beverages is made by a person other than clinical establishment based on a contractual arrangement with such establishment Circular No. 32/06/2018 dated 12-022018 supports this view - GST is payable on supply of the services by the applicant to Hospitals and no exemption is provided in r/o the same. In the instant case, as per the contract furnished by the applicant, it is seen that the applicant prepares food using his own labour at the premises of hospitals, who are the recipient of the service, and the applicant supply food to consumers who don t make payment to the applicant. The applicant is paid only by the hospitals. The above GST Council discussions and decisions clearly differentiate a restaurant/ canteen / mess run independently and the services extended by the applicant which fall under the category of outdoor catering. The very likely scenario of Outdoor Caterer trying to call himself as a 'restaurant' has been discussed and the decision to lower the tax rate only to restaurants has been taken by the council. Therefore, the supply of food by the applicant in the premises of client, whether prepared in that place or brought and served is more appropriately covered by the description at Sl.No. 7(v) of the Notification No. 11/2017- State Tax (Rate), issued in G.O.Ms No. 110, Revenue (CT-II) Department, Dt. 29-06-2017 and is liable to tax at 9% CGST and 9% SGST. Sl.No 7(v) now only covers supply at functions which are occasional and event based. The supply of food to institutions which were earlier covered under entry at Sl.No.7(v) has been included under Sl.No. 7(i) - In the instant case the applicant is making supply of services in the dining space of the hospitals which is squarely covered in the Explanation 1 to Sl.No 7(i) and thereupon is liable to tax at the rate of 5% subject to the condition that credit of input tax charged on goods and services used in supplying the services has not been taken. The above Notification No. 13/2018 - State Tax (Rate), issued in G.O.Ms No. 171, Revenue (CT-II) Department, Dt. 20-08-2018 was slightly amended vide Notification No. 27/2018 - In terms of the above amendment, from 01.10.2019, the supply of food by the applicant to hospitals fall under entry no. (ii) of S. No. 7 of Not. No. 11/2017 - State Tax (Rate), issued in G.O.Ms No. 110, Revenue (CT-II) Department, Dt. 29-06-2017 and is subject to 5% GST with the condition of non-availability of input tax credit - the supply of food to hospitals by the applicant depends on the time period (during which they are supplied) and will be subjected to tax as per the provisions of Not. No. 11/2017 - State Tax (Rate), issued in G.O.Ms No. 110, Revenue (CT-II) Department, Dt. 29-06-2017 amended from time to time.
Issues Involved
1. Classification of services rendered by the applicant. 2. Applicability of GST on the supply of food to hospitals. 3. Rate of GST applicable on the supply of food to hospitals. 4. Recovery of GST already paid by hospitals from future bills. Detailed Analysis 1. Classification of Services Rendered by the Applicant The applicant is engaged in supplying food and beverages at the canteen of hospitals. The services are classified under Service Code No. 9963. The applicant manages the canteen facilities and receives payments from hospitals, not directly from consumers. 2. Applicability of GST on the Supply of Food to Hospitals The ruling examined relevant notifications and circulars, including Notification No. 12/2017 and Circular No. 32/06/2018. It was determined that the exemption under entry 74 of Notification No. 12/2017 applies only when the clinical establishment itself provides food as part of healthcare services to in-patients. Since the applicant supplies food based on a contractual arrangement with hospitals, GST is payable on these services. 3. Rate of GST Applicable on the Supply of Food to Hospitals The rate of GST was analyzed based on various notifications and amendments: - From 01.07.2017 to 26.07.2018: The supply of food by the applicant falls under entry 7(v) of Notification No. 11/2017, attracting a tax rate of 18% (9% CGST + 9% SGST). - From 27.07.2018 onwards: Following the 27th GST Council Meeting, the supply of food to hospitals is classified under entry 7(i) of Notification No. 11/2017, attracting a tax rate of 5% (2.5% CGST + 2.5% SGST) with the condition that input tax credit is not available. 4. Recovery of GST Already Paid by Hospitals from Future Bills The ruling clarified that if no GST is chargeable, the GST already paid by hospitals and remitted to the government is recoverable from future bills. However, since GST is chargeable, this provision does not apply. Conclusion The ruling concluded that GST is chargeable on the supply of food to hospitals. The applicable tax rates are: - From 01.07.2017 to 26.07.2018: 18% (CGST 9% + SGST 9%). - From 27.07.2018 onwards: 5% (CGST 2.5% + SGST 2.5%) provided that input tax credit is not taken. Ruling - Q1: Whether GST is chargeable on the food supplied to hospitals on outsourcing basis? Ans: Yes. - Q2: If no GST is chargeable, is the GST already paid by hospitals recoverable from future bills? Ans: For the period from 01.07.2017 to 26.07.2018, the rate is 18% (CGST 9% + SGST 9%). For the period from 27.07.2018 onwards, the rate is 5% (CGST 2.5% + SGST 2.5%) provided that input tax credit is not taken.
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