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TMI Blog2018 (11) TMI 1012X X X X Extracts X X X X X X X X Extracts X X X X ..... in nature. The applicant has clearly stated that they are providing services only to industries and corporates and for their employees - the clients of the applicant are providing space, etc. to the applicant for supply of catering services and the services are supplied by the applicant at the clients' premises. The service being provided by the applicant would be covered under Serial No. 7 Heading 9963(i) or (iv)of Notification No. 11/2017 dated 28.06.2017 as the applicant can be said to be providing the services of a canteen, but as to the applicant falls under Sr. No.(i) or (iv) of the said Notification would depend on whether the canteen has the facility of is air conditioning or central air-heating in any part of the establishment, at any time during the year, as the applicant has not clarified the same anywhere. The said clause (i) has been amended by Notification No. 16/2017 - The amendment has also done away with the condition of "Supply, provided by a restaurant, eating joint including mess, canteen, neither having the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year and therefore the services of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ONTENTION - AS PER THE APPLICANT The submission (Brief facts of the case), as reproduced verbatim, could be seen thus - Brief details of the services provided by the Applicant 2.1 The Applicant is in the business of providing catering/canteen services to the industries and corporates. 2.2 The Applicant enters into contract with companies for providing catering services to its employees by following either Business to Business (B2B) Model or Business to Consumer (B2C) Model. 2.3 Under B2C Model, the Applicant enters into contract with the companies to provide catering services to the employees of the companies. In such type of the contracts, the amount of consideration is paid by the employees directly to the Applicant as per the agreed schedule, which is generally on monthly basis. All the risk with respect to the excess food is borne by the Applicant. 2.4 Under B2B Model, the Applicant enters into contract with the companies to serve food and beverages to the employees of the companies in the cafeteria designated within the companies' premises. In this model, the food is directly served by the Applicant to the employees of the companies. In such type of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Comer' (hereinafter referred to as 'Applicant') has filed an application before this Hon'ble Authority on 11.04.2018. The Applicant in this regard was granted an opportunity of personal hearing on 27.06.2018 wherein the Applicant through its authorized representative made detailed submissions covering certain additional grounds apart from the submissions made in the application. Therefore, in this regard, the Applicant wishes to make the following additional submissions which are without prejudice to the submissions made in the advance ruling application. SUBMISSIONS A. Under the Service Tax regime, the Revenue has accepted the Applicant's contention that it's business is covered under the definition of 'canteen service' and is not a 'outdoor catering' service. A.1 The Applicant submits that the revenue authorities have already accepted the contention of the Applicant that the services provided by the Applicant squarely fall under the definition of canteen service . In this regard, the Applicant refers to the dispute raised by the department under the Service tax regime. A.2 Under the Service Tax regime, the Applicant w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting facility was unable to avail benefit of service tax exemption. In order to address this concern, the legislature inserted a new Entry No. 19A vide Notification No. 14/2013-ST dated 22.10.2013 wherein, the legislature specifically granted exemption to the canteens having air-conditioning facility. A.7 During the year 2015, the Applicant was informed by Lear Automotive that service tax is not payable on the canteen services provided by the Applicant as the same were exempted vide the above-referred notifications. Therefore, on a careful perusal of Entry 19 of the Notification and the requirements therein, the Applicant was of the view that the Applicant is fulfilling all essentials of the said Notification and thus, the services of providing food and beverages to canteens maintained under the Factory Act, provided to Lear Automotive is exempt and it is not liable to pay tax on the same. A.8 Since, the Applicant was not liable to pay service tax on its services, it filed a Refund Application dated 27.11.2015 for ₹ 6,63,926/- for claiming the refund of service tax paid by it on the services in relation to serving of foods and beverages provided at the canteen maintain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 19A of Notification No. 25/2012-ST (as amended by Notification No. 14/2003-ST). A.13 The Applicant respectfully submits before the advance ruling authority that in light of the above discussion it is clearly understood that the issue of whether the Applicant is providing canteen services has been settled in favor of the Applicant and stands settled under the previous regime. The OIA dated 23.08.2016 has categorically held that the services provided by the Applicant are in nature of 'canteen' services. A.14 It is submitted that the Ld. Commissioner (Appeals) has in-fact proceeded to pass the order on the premise that the Applicant is involved in providing 'canteen' services. As explained in the OIA dated 23.08.2016, the distinction between the entries no. 19 and 19A of the Exemption Notification was the mere fact that entry 19 didn't include canteen services while Entry no. 19A provides exemption to the canteens which have an air-conditioner at any time during the year. A.15 Even though, no explicit definition has been given by to the term 'canteen' in the discussions/findings of the aforesaid order, however, the Applicant has been duly recog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than alcoholic liquor for human consumption), where such supply or service is for cash deferred payment or other valuable consideration. B.4 Further, the rates for the supply of services were notified vide the rate notification. Serial No. 7 of the above-referred notification notified the rate for services provided by a canteen and outdoor caterer. The relevant paras of the said notification read as follows Sl No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition 7 Heading 9963 (Accommodation, food and beverage services) (i) Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or drink, where such supply or service is for cash, deferred payment or other valuable consideration, provided by a restaurant, eating joint including mess, canteen, neither having the facility of air - conditioning or central air -heating in any part of the establishment, at an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent. Explanation.- declared tariff includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit. 2.5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation no. (iv)]. B.6 Thus, on a perusal of the above paragraphs, it is understood that the services provided by a restaurant, mess, canteen or an eating joint have been sought to be taxed at 5% (2.5%+2.5%) provided the supplier has not availed any ITC in respect of the same. In this regard, attention is also invited to entry at Serial No. 7(v) of the rate notification which specifies that the services provided in the nature of 'outdoor catering' services are taxable at the rate of 18% (9%+9%). B.7 Thus, it is imperative at this juncture to identify as to whether the services provided by the Applicant fall un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e conditions mentioned therein. B.11 The contention of the Applicant is further clarified by the plain reading of the Circular No. 28/02/2018-GST dated 08.01.2018 read with corrigendum issued vide Circular No. 28/02/2018 dated 18.01.2018. The aforesaid circular while clarifying the taxability of mess facility provided in educational institutions stated that the supply of food or beverages by a mess or canteen is taxable at 5% without ITC and the fact whether the said service is supplied by the institution or a third party is immaterial. The corrigendum issued to the above-referred circular further clarified as follows: 2.1 If the catering services is one of the services provided by an educational institution to its students, faculty and staff and the said educational institution is covered by the definition given under para 2(y) of notification No. 12/2017-Central Tax (Rate), then the same is exempt. [SI. No. 66A of notification No. 12/2017-Central Tax (Rate) refers] 2.2 If the catering services, i.e., supply of food or drink in a mess or canteen, is provided by anyone other than the educational institution, then it is a supply of service at entry 7(i) of notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant submits that the nature of services provided by the Applicant has not changed under the previous regime as well as the existing regime. The Applicant having satisfied that it provides canteen services should squarely fall under Entry 7(i) of the rate notification. B. 15 In this regard, the Applicant submits that under the earlier law the Applicant was denied the exemption since the term 'canteen' was not mentioned under the relevant entry, however, the Entry No. 7(i) of the rate notification includes the term 'canteen' also and the therefore the same has to be construed accordingly. Further, the Department has also accepted the contention of the Applicant that it is engaged in providing canteen services and not outdoor catering services. B. 16 Therefore, in light of the above submissions, the Applicant falls under the definition of canteen and the same do not fall under the ambit of 'outdoor catering' services. Without prejudice to the above, even if it is presumed that the services provided by the Applicant can be covered by both the categories of 'canteen' services and 'outdoor catering' services, the Applicant should be gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the goods in which more than 25% by weight, red mud, press mud or blast furnace slag is used. The heading is based entirely on material used on composition of goods. A tariff heading, based on composition of goods, is also specific heading like a heading based on commercial nomenclature. Therefore, we are of the view that the goods in issue are appropriately classifiable under Subheading No. 6807.10 of the tariff entry. B.20 Applying the ratio of the above case to the facts of the present matter, it is clearly understood that in case the Applicant's services fall under both the categories of 'outdoor catering' as well as 'canteen' then the same should be classified under the category of 'canteen' services as the same is beneficial for the Applicant. Accordingly, the present services are liable to be taxed at the rate of 5% as per the Serial No. 7(i) of the rate notification. B 21 In this regard, reliance is also placed upon the case of Share Medical Care vs Union of India [2007 (209) E.L.T. 321 (S.C.)], wherein the Hon'ble Supreme Court held in clear terms that in a case where the applicant is entitled to benefit under two different Notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ood, beverages and other eatables (non-alcoholic drinks) i.e. complete services at various places of their customers who have in-house canteen in their factories. The Applicant i.e. Rashmi Hospitality Services Pvt. Ltd. had filed an application before the Gujarat Advance ruling authority on the following issues: Issue 1- Whether the rate of tax on supplies made to the recipient would be 12% or 18%? Issue 2- Whether the activity undertaken by the applicant is in nature of supply of service provided by the restaurant eating joint including mess canteen or in nature of supply of outdoor catering? C.2 The Gujarat Advance Ruling Authority finally held that the supply of services by Rashmi Hospitality Services Pvt. Ltd. is covered by Sr. No. 7(v) of the Notification No. 11/2017- Central Tax (Rate) as outdoor catering, attracting GST @18%. In this regard the Ld. Advance ruling authorities had relied upon the decision of the Hon'ble Allahabad High Court in the case of Indian Coffee Worker's Co-op Society Ltd. reported at [2014 (34) STR 546 (All.)]. C.3 The Hon'ble Allahabad High Court in the above-mentioned case had held that activities of providing food, beverages ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinciple laid down in the Indian Coffee Workers decision which is inapplicable in the present case in light of the corrigendum issued vide Circular No. 28/02/2018 dated 18.01.2018. C.9 Further, the Allahabad High Court decision had held the services provided by the assessee in the said case on the ground that the services where provided by the assessee at a place other than his own and therefore the services were covered by the definition of 'outdoor caterer'. However, in the present case, as already submitted above there are also situations or transactions wherein the Applicant prepares food in a central kitchen and the same is only served at the premises of the client. Therefore, the facts involved in the Indian Coffee Workers case are distinguished from the present case and hence the ratio of the same cannot be applied in the present case. C.10 The Applicant also submits that in the case of B2C transactions of the Applicant, the services provided by the Applicant are akin to a restaurant. The entire risk of running the business lies upon the Applicant since the consideration is paid by the employees and the same is not covered by the client company. However, the Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ched to a factory, school etc. D.5 Similar to the services provided in a restaurant, the Applicant has pre-fixed menu which cannot be altered by the consumer i.e. the employee. Further, the food and beverages are supplied at the place and time which are not decided by the consumer just like any restaurant. D.6 Thus, the Applicant submits that the services provided by it are akin to a restaurant service and the same should be taxed accordingly. In light of the above, the Applicant falls under the serial no. 7(i) of the rate notification and the services provided by it are liable to be taxed similar to the restaurant services. D.7 In this regard, the Applicant further wishes to place reliance upon a sample agreement entered into between Applicant and Tata Consultancy Services Ltd. (TCS) which will further clarify the contention of the Applicant. A copy of the said agreement dated 23.03.2018 is attached herewith as Annexure-4. Further, the copy of the invoices raised by the Applicant on TCS is attached herewith as Annexure-5. Upon perusal of the said agreement it is clearly understood that the Applicant is in the business of supplying food and beverages at the client's pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als that are cooked and served on the premises.' The meaning of the term 'Canteen' is given in the above referred Dictionary as a restaurant in a workplace or educational establishment.' C.2 Some of the Dictionary meanings of the word 'canteen' are as under: A restaurant provided by an organization such as college, factory, or a company for its students or staff (ref: www.oxforddictionaries.com') A restaurant attached to a factory, school, etc. providing meals for large number of people (ref: www.colinsdictionary.com') A place in a factory, office,etc. where food and meals are sold, often at a lower than usual price (ref: www.dictionary.cambridge.org) C.3 Therefore, the canteen is understood to be a place, generally in an organization or institute such as factory, school, etc. where meals are provided. Therefore, to constitute a canteen it is important that: - Such place must be in organization, institutes such as factory, school, etc. Meals must be provided at such place. C.4 In other words, reference to the term 'canteen' in the GST rate Notification is made to the place where the food is served. In clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a supply of service at entry 7(i) of notification No. 11/2017-CT (Rate) amended vide notification No. 46/2017-CT (Rate) dated 14.11.2017) to the concerned educational institution and attracts GST of 5% provided that credit of input tax charged on goods and services used in supplying the service has not been taken, effective from 15.11.2017. .... Emphasis Supplied. C.7 Therefore, from the above Circular, it is amply clear that the catering services provided by anyone other than the educational institutions (i.e. an outdoor caterer) to the students, staff, etc. of the education institution, is to be treated as canteen' services as covered under Entry No. 7(i) of Notification No.11/2017 - CT (Rate) and would attract 5% GST cumulatively (CGST SGST). C.8 In view of the above submissions, the Applicant has analysed the catering services provided by it under both the Models, as follows: B2C Model C.9 The Applicant submits that the catering services by it under B2C Model involves supply of food or drinks to the employees in the canteen established in the premises of the companies/institutions. Under this Model, the Applicant recovers the charges for supply of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017 as amended by the Notification No.46/2017Central Tax (Rate) dated 14 th November 2017 or as outdoor catering services under Entry No.7(v)of the said Notification ? 2. Brief facts of the services provided by the Applicant: The Applicant is engaged in providing catering services under two different models namely Business to Consumer (B2C) and Business to Business (B2B)Model. Under B2C Model, the applicant enters into contract with the companies to provide catering services to employees of the companies. The amount of consideration is paid by the employees directly to the Applicant as per the agreed schedule which is generally on monthly basis. Under B2B Model, the applicant enters into contract with the companies to serve food and beverages to the employees of the companies in the cafeteria designated with the companies premises In this model ,the food is directly served by the Applicant to the employees of the companies. The amount of consideration is paid by the companies directly to the Applicant as per the agreed schedule. Under both the Models, the food is prepared either in the kitchen located in the companies' premises or in the 'centralized kitchen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y No.7(v) of the above mentioned Notification No.11/2017 dated 28 th June 2017. Under Service Tax Regime, The expression caterer' is defined in clause (24) of Section 65 of the Finance Act 1994 as follows: Caterer' means any person who supplies, either directly or indirectly, any food, edible preparations, alcoholic or nonalcoholic beverages or crockery and similar or accoutrements for any purpose or occasion. The expression Outdoor caterer' is defined in clause(76)(a) of Section 65 of the Finance Act 1994 as follows: Outdoor caterer means a caterer engaged in providing services in connection with catering at a place other than his own but including a place provided by way of tenancy or otherwise by the person receiving such services. The view of Outdoor Caterering services is expressed in the recent Judgement delivered by Hon.High Court, Allahabad on 10.04.2014 in case of M/s. Indian Coffee Workers' Co-operative Society Limited Vs. Commissioner of Central Excise Service Tax ,Allahabad (Central Excise Appeal No.50 of 2014).As per the Judgement delivered by Hon.High Court, Allahabad , the Assessee was liable to the payment of service tax as an O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standards of materials, food items to be supplied in the canteen and (d) the food rates are as per the contract between the company and the applicant. 5.5 We find that at present they are treating catering services provided under B2C Model as canteen/ restaurant services under Entry. No. 7 (i) of Notification No. 11/2017 dated 28th June 2017 as amended and are paying GST at 5% cumulatively (CGST SGST). Under B2B Model, they are treating such catering services as outdoor catering services under Entry 7 (v) of the abovementioned Notification and are paying GST at 18% cumulatively (CGST SGST). 5.6 We find that there is no doubt in the applicant's mind that they are providing catering services as mentioned in their application. The only doubt that has been raised by them is whether the said catering services, under both the models, supplied by them are to be classified as canteen/restaurant services under Entry. No. 7(i) of the Notification No. 11/2017 dated 28th June 2017 as amended, or as outdoor catering services under Entry. No 7(v) of the same Notification. In effect they have no doubt about the taxability of the catering services provided by them. 5.7 We find th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , by way of or as part of any service or in any other manner whatsoever in outdoor catering wherein goods, being food or any other article for human consumption or any drink (whether or not alcoholic liquor for human consumption), as a part of such outdoor catering and such supply or service is for cash, deferred payment or other valuable consideration. 9 - (vi) Accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff .......... 9 - (vii) Supply, by way of or as part of any service or in any other manner whatsoever, of goods, including but not limited to food or any other article for human consumption or any drink (whether or not alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration, in a premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organising a function) together with rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find, from the submissions made by the applicant, that the provisions of clause (ii), (iii), (vi), and (vii) of the above mentioned Notification do not apply to the current facts in hand. Therefore the issue before us is to ascertain whether the activities of the applicant would fall under Sr. No. 7, Headings 9963 (iv) or (v) of the above referred Notification. 5.9 We find that further amendments have been made to clause (v) of above mentioned Notification No. 11/2017 vide Notification No. 13/2018-Central Tax (Rate) as under:- (c) for item (v) and the entries relating thereto in columns (3), (4) and (5), the following shall be substituted, namely: - (3) (4) (5) (v) Supply, by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, at Exhibition Halls, Events, Conferences, Marriage Halls and other outdoor or indoor functions that are event based and occasional in nature. 9 - 5.10 Thus from the above amendments it is clear that the services supplied by the applicant in normal course does not appear to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , snacks or tea and coffee may be cooked or prepared in the canteen itself. (4) The items are sold to the employees directly by the contractor at agreed prices which are mostly subsidized and the sale amounts are collected by the contractor themselves. However prepaid meal vouchers may also be given to employees by the company which are to be accepted by the contractor. (5) The contractor may be required to serve to employees by counter service or even table service in respect of senior officials of the company. (6) The company communicates to the contractor only approximate estimated quantity consumption it does not guarantee any quantity which may vary on a daily basis. (7) The contractor can generally sell additional items with the approval of canteen management, company management and rates of all items are to be displayed. (8) The contractor may be required to make special arrangement for lunch, breakfast, dinner or refreshment when required by the management, at mutually agreed rates. (9) The menu is decided by the company from time to time. (10) The service of contractor are generally to be monitored by designated officials of the company and they have f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 dated 28.06.2017 as the applicant can be said to be providing the services of a canteen, but as to the applicant falls under Sr. No.(i) or (iv) of the said Notification would depend on whether the canteen has the facility of is air conditioning or central air-heating in any part of the establishment, at any time during the year, as the applicant has not clarified the same anywhere. The said clause (i) has been amended by Notification No. 16/2017 as (i) Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or drink, where such supply or service is for cash, deferred payment or other valuable consideration, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is Supplied, other than those located in the premises of hotels, inns, guest houses, club, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent. Explana ..... X X X X Extracts X X X X X X X X Extracts X X X X
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