2019 (2) TMI 832 - AAR - GST

Classification of supply - supply of goods or services or both - Mid-Day Meal Programme - Anganwadi meals programme - Charitable Trusts - scope of supply - Preparation and serving of food to children of government schools under Mid-Day meal Program of Government and serving of food under Government sponsored Anganwadi meals - Transfer of goods/capital equipments exclusively used for mid-day meal program and anganwadi meal programme - sale of scrap which was generated during Mid-Day Meal program. Preparation and serving of food to children of government schools under Mid-Day meal Program of Government and serving of food under Government sponsored Anganwadi meals - Held that - The activities undertaken by the applicant are not covered under the definition of charitable activities - The activities undertaken by the applicant under Mid-Day Meal Programme and Anganwadi meals programme is a supply in accordance with the Section 7 of CGST Act, 2017. However, MDM programme is taxed Nil by the virtue of Notification No. 12/2017 dated 28.06.2017 mentioned at serial number 66 heading number 9962 - The Preparation and serving of food under Government sponsored Anganwadi meals programme which is undertaken by the applicant who receives reimbursement from the government of Rajasthan @ ₹ 5.40 per pregnant women/ lactating nursing mothers/ adolescent girls and ₹ 5.25 per child per day. (as per the MOU dated 22.12.2010 between the TAPF and Director cum Deputy Secretary, Women Child Development Department, Government of Rajasthan). Therefore, the above said activity is against consideration and hence it is covered under the scope of 'supply' as per section 7 of CGST/RGST Act, 2017. Transfer of goods/capital equipments exclusively used for mid-day meal program and anganwadi meal programme - Held that - As the activity of 'transfer' is covered under definition of supply under section 7 of CGST/RGST Act, 2017. Thus, the transfer of goods / capital equipments, exclusively used for Mid-Day Meal (MDM) program and Anganwadi meals program sponsored by Government, between different kitchens of applicant which are 'distinct persons' as per GST law is covered under the scope of 'supply' as per section 7 of CGST/RGST Act, 2017. Sale of scrap - Held that - The sale of scrap is an activity of sale for a consideration as mentioned in definition of 'supply' as per section 7 of CGST/RGST Act, 2017.

Issues Involved:
1. Whether the preparation and serving of food under the Mid-Day Meal (MDM) Program and Anganwadi meals program is considered a supply under GST.
2. Whether the transfer of goods/capital equipment between different kitchens of the applicant is considered a supply under GST.
3. Whether the sale of scrap items generated during the Mid-Day Meal program is considered a supply under GST.

Issue-wise Detailed Analysis:

1. Preparation and Serving of Food under Mid-Day Meal and Anganwadi Meals Program:
The applicant, a charitable trust registered under section 12AA of the Income Tax Act, 1961, implements the Mid-Day Meal Scheme in government and government-aided schools to eliminate classroom hunger and support the right to education for socio-economically disadvantaged children. The applicant operates 38 kitchens across 12 states and is reimbursed by the government for cooking costs and transportation charges. The Ministry of Human Resources Development prescribes a Model MOU for partnering with NGOs for this purpose.

The applicant argued that their activities should not be considered a supply under GST. However, the ruling observed that the applicant receives conversion charges from the government for cooking meals, which constitutes a business activity as per Section 2(17) of the CGST Act. The ruling also noted that the activities of the applicant do not fall under the definition of "charitable activities" as per Notification No. 12/2017 Central Tax (rate) dated 28.06.2017. Consequently, the preparation and serving of food under the Mid-Day Meal and Anganwadi meals program is considered a supply under Section 7 of the CGST Act, 2017. However, the Mid-Day Meal program is taxed Nil by virtue of Notification No. 12/2017 mentioned at serial number 66 heading number 9962.

2. Transfer of Goods/Capital Equipment between Different Kitchens:
The applicant transfers goods such as spices, food grains, kitchen equipment, and distribution vehicles between its kitchens located in different states. These kitchens are registered under GST and are considered "distinct persons" for GST purposes. The ruling determined that such transfers are covered under the definition of supply as per Section 7 of the CGST/RGST Act, 2017, and thus, are subject to GST.

3. Sale of Scrap Items Generated during Mid-Day Meal Program:
During the Mid-Day Meal program, the applicant generates scrap items such as empty oil tins, pipes, iron, plastic items, and spare parts, which are sold from time to time. The sale proceeds of these items are recorded as miscellaneous income in the books of accounts. The ruling concluded that the sale of scrap items is an activity of sale for consideration and is covered under the definition of supply as per Section 7 of the CGST/RGST Act, 2017.

Ruling:
A. The preparation and serving of food to children of government schools under the Mid-Day Meal Program and serving of food under the Government-sponsored Anganwadi meals program is covered under the scope of supply as per Section 7 of the CGST/RGST Act, 2017.
B. The transfer of goods/capital equipment exclusively used for the Mid-Day Meal program and Anganwadi meals program between different kitchens of the applicant, which are distinct persons as per GST law, is covered under the scope of supply as per Section 7 of the CGST/RGST Act, 2017.
C. The sale of scrap items generated during the Mid-Day Meal program is an activity of sale and thus covered under the scope of supply as per Section 7 of the CGST/RGST Act, 2017.

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