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TMI Blog2020 (8) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... Hyderabad, (GSTIN No. 36AAMPT4171B1ZN) has filed an application in FORM GST ARA-01 under Section 97(1) of TGST Act, 2017 and Read with Rule 103 of CGST/TGST Rules, seeking Advance Ruling on the issues raised in their application. 2. The applicant submitted the application in FORM GST ARA-01 and Statement containing the applicant's interpretation of law & relevant facts and requested for advance ruling on classification of services rendered by them and rate of tax applicable. They have submitted a copy of Challan evidencing payment of application fee of Rs. 10,000/-. 3. A personal hearing was held in this case and the assesse have appeared for personal hearing on 09.11.2018. However due to administrative exigencies, the Orders were not released. Further Government Go. Rt.No.312, Revenue (CT.II) Department, Dt. 05.11.2019 have appointed Sri B. Raghu Kiran, IRS, Joint Commissioner(Central Tax) as member in place of Sri V. Srinivas, IRS, Additional Commissioner(Central Tax). Hence another notice was issued to the applicant to appear for Personnel Hearing on 04-12-2019. The Authorised representative Sri. G. Ashok Kumar appeared and explained their case as under: a. The Authorised re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ST) for clarification of rate of tax under GST regarding supply of food to Hospital. The Commissioner (ST) vide letter CCT's Ref No. A(1)/15/2018 dated 0502-2018 replied to the Hospital Authorities regarding rate of GST on food and beverage services will be chargeable as per Notification No.11 of 2017 and advised to file an application for clarification on Advance Ruling before Advance Ruling Authority for authenticity. 8. Further, it was also contended that the Government of India ministry of Finance Department of Revenue Tax research unit has given certain clarification regarding levy of GST on health care services provided by a clinical establishment and food supplied to the patients as per Circular No.32/06/2018-GST, dt. 12-022018 at Si. No. 5(3) as under: Sl.No. Issue Clarification 5 (3) Food supplied to the patients: Health care services provided by the clinical establishments will include food supplied to the patients; but such food may be prepared by the canteens run by the hospitals or may be outsourced by the Hospitals form outdoor caterers. When outsourced, there should be no ambiguity that the supplier shall charge tax as applicable and hospital will get no ITC. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot taxable. 12. We find that entry 74 of Notification No. 12/2017 deals with exemption to the services provided by clinical established which is read as under : Heading 9993 Services by way of- (a) health care services by a clinical establishment, an authorised medical practitioner or para-medics; (b) services provided by way of transportation of a patient in an ambulance, other than those specified in (a) above. Nil Nil From the above, it can be inferred that 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. Therefore we hold that GST is payable on supply of the services by the applicant to Hospitals and no exemption is provided in r/o the same. 13. To decide the rate of tax in r/o the supply of services by the applicant, reference is to be made to Notification No. 11/2017- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax rate on liquor. The Principal Secretary, Finance, Odisha proposed a tax rate of 5% without input tax credit for the outdoor catering. The Hon'ble Minister from Jharkhand stated that many persons carried on only catering business, and for them, rate of tax should be kept at 5% without input tax credit. He added that many outdoor caterers did only dry catering, that is, provided labour while the food, etc. was bought by the customer. Advisor, Finance, Punjab also supported this suggestion. He stated that several people only did catering business and theoretically, they could claim that they had set up a restaurant to cater to a function at a venue. He suggested that rate of tax for outdoor catering where only food was being provided should be kept at 5%. The Hon'ble Chairperson observed that low rate of tax for one sector would lead to demand for lowering tax for other services sector also. The Hon'ble Minister from Uttar Pradesh proposed to keep a uniform tax rate of 12% without input tax credit as it would be bad optics to charge tax at the rate of 18% on outdoor catering and 5% on restaurant. The Secretary stated that this proposal would not be acceptable to the trade. The Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate), issued in G.O.Ms No. 110, Revenue (CT-II) Department, Dt. 29-06-2017. 16. The above amendment is based on the decision of the GST Council, in its 23rd meeting held on 11th November 2017 which is given supra. From the discussions, it is evident that the intention of having tax rate of 5% as in Sl.no 7(i) is only in respect of supply of foods in Standalone restaurants and other similar eating joints and that in Hotels wherein the declared tariff of any unit of accommodation is less than Seven thousand Five hundred only. That is it is applicable in cases where the consumers who purchase the food & beverages, do so on the premises of the supplier of such food & beverages and directly pay to such supplier. 17. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udes such supply at a canteen, mess, cafeteria or dining space of an institution such as a school, college, hospital, industrial unit, office, by such institution or by any other person based on a contractual arrangement with such institution for such supply, provided that such supply is not event based or occasional. 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)] 20. From the above, it is clear that 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. 21. Further, the above Notification No. 13/2018 - State Tax (Rate), issued in G.O.Ms No. 171, Revenue (CT-II) Department, Dt. 20-08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation (iv)] (vi) Accommodation, food and beverage services other than (i) to (v) above Explanation: (a) For the removal of doubt, it is hereby clarified that, supplies covered by items (ii), (iii), (iv) and (v) in column (3) shall attract State tax prescribed against them in column (4) subject to conditions specified against them in column (5), which is a mandatory rate and shall not be levied at the rate as specified under this entry. (b) This entry covers supply of 'restaurant service' at 'specified premises' (c) This entry covers supply of 'hotel accommodation' having value of supply of a unit of accommodation above seven thousand five hundred rupees per unit per day or equivalent. (d) This entry covers supply of 'outdoor catering', provided by suppliers providing 'hotel accommodation' at 'specified premises', or suppliers located in 'specified premises'. (e) This entry covers composite supply of 'outdoor catering' together with renting of premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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