2018 (5) TMI 1181 - AAR - GST

Rate of GST - applicant is having business of caterers and supply food, beverages and other eatables (non-alcoholic drinks) complete services at various places of their customers who have in house canteens at their factories - whether rate of tax on their supplies made to the recipient would be 12% or 18%? - applicability of Circular No. 28/02/2018GST dated 08.1.2018. Held that - the service recipient has engaged the applicant for running of the canteen for their workers / employees. The rates for the meal, snacks, tea have been fixed and payable by the recipient. Menu is required to be decided by the canteen committee of the recipient. It is, therefore evident that the applicant, who is caterer, is providing service from other than his own premises to the recipient. Therefore, the nature of service provided by the applicant is that of outdoor catering service. Even though the meal, snacks, teas are provided to and consumed by the workers/ employees of the recipient, it is clear from the foregoing discussion that the applicant is providing service to the recipient and not to workers / employees of the recipient. From the nature of service provided by the applicant, as is evident from the copy of agreement, it is clear that it is not in the nature of service provided by a restaurant, eating joint including mess, canteen. Therefore, the clarification issued vide Circular No. 28/02/2018GST dated 08.1.2018 is not applicable. The service of catering is provided by the applicant to the recipient and the fact that the meal, snacks, tea etc. are consumed by the workers / employees of the recipient would not alter the nature of service provided by the applicant. Ruling - The supply of services by M/s. Rashmi Hospitality Services Private Limited (GSTIN 24AACCR5234QIZ2) is covered under Sr. 70) 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. 11/201 7-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%).

Summary

Issues Involved:
1. Appropriate rate of Goods and Services Tax (GST) applicable on the services provided by the applicant.
2. Classification of the services provided by the applicant under the GST regime.

Detailed Analysis:

1. Appropriate Rate of GST:

The applicant, M/s. Rashmi Hospitality Services Private Limited, provides catering services to various customers, including those with in-house canteens at their factories. The applicant typically charges GST at 18%, classifying their services under heading 9963 as outdoor catering. However, one customer requested the applicant to charge GST at 12%. The applicant sought an advance ruling to determine whether the applicable GST rate should be 12% or 18%.

The applicant referred to a clarification issued by the Tax Research Unit, Department of Revenue, which suggested a GST rate of 5% for services provided in statutory canteens maintained under law. The applicant questioned whether this clarification applied to them and what the tax rate should be before and after the said notification.

The Goods and Services Tax and Central Excise Commissionerate, Kutch (Gandhidham), indicated that the services provided by the applicant fall under Chapter Heading 996333, which pertains to food, edible preparation, and beverage serving services, attracting a GST rate of 18%.

2. Classification of Services:

The core issue was whether the applicant's services should be classified under Sr. No. 7(i) of Notification No. 11/2017-Central Tax (Rate) as services provided by a restaurant, eating joint, including mess, canteen, or under Sr. No. 7(v) as outdoor catering services.

The agreement between the applicant and the client required the applicant to run the canteen, supplying snacks, tea, lunch, and dinner to the employees/workers. The company would pay the applicant based on the canteen meal availed. The menu was to be decided by the canteen committee.

The Authority for Advance Ruling examined whether the services provided by the applicant were in the nature of services provided by a restaurant, eating joint, including mess, canteen, or as part of outdoor catering. The agreement indicated that the applicant was engaged to run the canteen for the client's workers/employees, with fixed rates for meals, snacks, and tea. The applicant provided services from a place other than their own premises, making it an outdoor catering service.

The Authority concluded that the nature of the service provided by the applicant was that of outdoor catering, not services provided by a restaurant, eating joint, including mess, canteen. Therefore, the clarification issued in Circular No. 28/02/2018-GST dated 08.01.2018 was not applicable.

Ruling:

The Authority for Advance Ruling determined that the supply of services by M/s. Rashmi Hospitality Services Private Limited is covered under Sr. No. 7(v) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended, attracting GST at 18% (CGST 9% + SGST 9%).