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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 ..... ake it clear that the provisions of both the CGST Act and the GST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the "GST Act". 02. FACTS AND CONTENTION - 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clarity in the area of catering services, the Applicant would like to seek an advance ruling whether the catering services provided by it under both the Models would amount to supply of canteen/restaurant services or supply of outdoor catering services? Additional submissions on 10.07.2018 Mr. Ismail Ahamad Soofi (Prop, of Chef's Corner) .... Applicant SYNOPSIS 1. Mr Ismail Ahamad Soofi proprietor of 'M/s. Chef's 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Entry No. 19 reads as follow: "19. Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year." A.6 After the said amendment was carried out in Entry No. 19 of the said Notification, the wrongful availment of service tax exemption was stopped, but due to this, the canteens in the factories established as per the Factory Act,1948 and having air-conditioning/central air-heating 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of whether, the exemption could be provided to the Applicant under Entry No. 19A of Notification No. 25/2012-ST (as amended by Notification No. 14/2003-ST), it was held that the Applicant fulfilled both the conditions as stated under: a) Of serving food at a canteen which is maintained in a factory covered under Factory Act, 1948 b) The canteen has an air-conditioned facility. A.12 In light of the above, the Ld. Commissioner (Appeals) held that the Applicant's canteen facility at the Chakan unit was eligible for exemption under the Entry 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 Appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration in the course of furtherance of business is taxable under the Central Goods & Services Act, 2017 (hereinafter referred to as the "CGST Act") and the respective State GST Acts. B.3 Further, Clause 6(b) of Schedule II of the CGST Act deems the supply of food and beverages for a consideration as a supply of service. The said clause reads as under: "supply by way or as part of any service or in any other manner, whatsoever, of goods, being food or any other article for human consumption or any drink (other 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 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dum 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 No. 11/2017-CT (Rale) [as 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 given the benefit of lower rate of tax B. 17 In view of the above, the Applicant further submits that assuming without admitting the services supplied by the Applicant falls under both the Serial No. 7(i) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Notifications or under two different Heads, he can claim more benefit and it is the duty of the authorities to grant such benefits if the applicant is otherwise entitled to such benefit. The Hon'ble Apex Court in pertinent pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication 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 (alcoholic or non-alcoholic) or crockery and similar articles for any purpose or occasion which are provided at a place other than his own provided to him by way of tenancy or provided by the recipient will - fall under the category of 'out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 Allahabad High Court decision in the above case has not considered the possibility of the present services falling under the category of 'restaurant' service and hence the said decision is not applicable in the present case. C.11 Thirdly, the Applicant s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumer 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 premises and the said supply is restricted to the employees/guests/ any other authorized personnel of TCS and is not available to the general public. Further, the Applicant accepts food card/coupons directly from the employees of the client and encashes the same later on (Annexure B o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 clearer terms, it is said to be canteen services when the food is served in the premises of the companies as opposed to the food served in other places like restaurant etc. C.5 At this point, the Applicant would like to bring to your attention the Circular No. 28/02/2018-GST dated 08 th January 2018 (hereinafter referred to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hasis 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 food or drinks from the staff/employees. C.10 On reading and applying the meaning of the term "canteen' and also the Circular to the Applicant's B2C Model, the Applicant submits that the catering services provided by it to the employees of the companies/institutions fall under the category of canteen services attracting 5% GST (CGST & SGST) as the food and dri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 located outside the companies' premises. Presently, the Applicant treats the catering services provided by it under B2C Model as canteen/restaurant services under Entry No.7(i) of the Notification No.11/2017 dated 28 th June 2017 as amended by the Notification 17- Central Tax (Rate) dated 14 th November 2017 and discharges GST at 5% cumulatively (CGST & SGST) For the catering services provided by it under B2B Model ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion" 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 Outdoor Caterer within the meaning of Section 65(105) (zzt) read with clauses (24) and (76a) of the Finance Act, 1994. 04. HEARING 4.1 The case was taken up for preliminary hearing on dt. 16.05.2018, with respect to admission or rejection of the application nobody was present from the side of applicant. The jurisdictional officer, Sh. Y. A. Lokre, Dy. Commr. of S.T.(PUN-VAT-E-603), Pune appeared and made written submissions. 4.2 The applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces 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 that under Notification No. 11 /2017-Central Tax (Rate) dated 28th June, 2017, Serial No. 7 Heading 9963(i) covers accommodation, food and beverages services. The nature of services and the applicable tax rate on the same is as under:- 7 Heading 9963 (Accommodation, food and beverage services) i) Supply, by way of or as part of any service or in any other manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 renting of such premises. 9 - (viii) Accommodation in hotels including five star hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff .............. 14 - (ix) Accommodation, food and beverage services other than (i), (ii), (iii), (iv), (v), (vi), (vii) and (viii) above. 9 - The above notification was amended by the Central Government vide its Notification No. 46/2017- Central Tax(Rate) dated 14.11.2017 wherein the item nos. (i) was substituted as following: 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 oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a mention post the amendment. Hence it can be inferred that the said clause post the amendment made considers outdoor catering as a 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. 5.11 Since the supply of catering services provided by the applicant cannot be considered to be in the nature of "outdoor catering", we shall now discuss whether the activities of the applicant would fall under Sr. No. 7, Headings 9963(i) of the above referred Notification. To understand whether the activity of the applicant as claimed is 'canteen services' we would be required to examine as to what a canteen is. 5.12 We find that word "canteen" as per Cambridge English Dictionary is "a place in factory, office, etc. where food and meals are sold often at a lower than usual price". "A place in a factory, office, etc. where employees can buy food and meals at a lower price". Further as per general understanding a "canteen" is a small cafeteria or snack bar, especially one in a mil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he applicant has provided three sample agreements entered into by them with its clients namely M/s Renishaw Metrology Systems Limited (RMSL) and M/s Corning Technologies India Private Limited (CTI) and also M/s. Tata Consultancy Services Ltd. (TCS). 5.14 In their contract with (RMSL) which is wef 01.04.2018 it is clearly seen from a reading of clauses under the heading 'REPRESENTATION OF CONTRACTOR' that the Contractor shall ensure that the food is cooked and carried from outside and no food item is prepared in the company premises using gas/electricity or otherwise. RMSL has under the contract assured the applicant of a minimum of 370 lunch meals. RMSL shall provide space, fixtures, fittings equipment, etc. 5.15 In their contract with CTI, it is again clearly seen from a reading EXHIBIT A to the agreement/contract that the location of the Kitchen of the applicant is at a distance of about 7 kms from the CTI plant and therefore it appears that the food is cooked and carried from outside and sold in CTI's premises. Here too it is seen that the applicant has been provided with space, utensils and other equipments, crockery, cutlery, water, electricity, cleaning of cafet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the published charges for such unit. However we find that 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 applicant, in view of amendment vide Notification No. 46/2017 dated 14.11 2017 would fall under Serial no. 7(i) of this amended Notification. 5.18 From the above discussions we find that the activity of the applicant would fall under clause (i) of Notification No. 11/2017 as amended and with effect from 14.11.2017 i.e the date on which Notification No. 46/2017- Central Tax(Rate) came into effect. 06. In view of the extensive deliberations as held hereinabove, we pass an order as follows : ORDER (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA- 05/2018-19/B-61 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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