2018 (7) TMI 1492 – AUTHORITY FOR ADVANCE RULING – MAHARASHTRA – 2018 (15) G. S. T. L. 439 (A. A. R. – GST) – Classification of services – Outdoor catering services or not? – company is engaged in the business of supply, by way of and as a part of and in any other manner whatsoever of goods, being food and any other article for human consumption or drink.
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The company (Merit Hospitality) has entered into a contract for supply of food to the employees of the company say 'A' Ltd. – Merit Hospitality has to supply the food at 'A' Ltd.'s premises. The distribution of the food is directly done by the staff of 'A' Ltd. The menu and the material specifications are mentioned in the contract and also the rate for various items are pre-determined between Merit Hospitality and the company – the billing is done by Merit Hospitality directly to the company on monthly basis and payment is received from the company to Merit Hospitality directly – Whether the activity be called as canteen activi
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door caterers under the GST Act and that the company is engaged in the business of supply, by way of and as a part of and in any other manner whatsoever of goods, being food and any other article for human consumption or drink – the service being provided by the company would clearly fall under Group 99633 – Food, edible preparations, alcoholic and non-alcoholic beverages serving services and further under service code 996337 – Other Contract Food Services which are in the nature of outdoor caterer services and would be taxable under Serial No. 7 Heading 9963 (v) @ 18% under GST as applicable.
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Natural bundling of services or not? – In addition to supply of food on the request of the client Merit Hospitality Services Pvt. Ltd. also undertake the services of distribution of food for which Merit Hospitality raises separate bill charging 18% GST/SGST – Can both the activities put together i.e. supply and distribution of food to the employees of 'A' ltd as canteen services and applica
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utdoor catering services are being provided to the Employees Cooperative Society which would be taxable @ 18% only.
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The Merit Hospitality has entered into a contract with a company called say “B” Ltd. “B” Ltd. is having its unit in SEZ area ( Special Export Zone). The supply of food is done by Merit Hospitality to the employees of “B ” Ltd. and payment for the same is made by the employees of “B ” Ltd. directly to Merit Hospitality – Can Merit Hospitality claim that since the food is supplied directly to SEZ area hence no GST is applicable? – Held that:- The benefit of zero rated supply would be allowed to a domestic unit only if supply of goods or services to a SEZ unit or developer is only in respect of authorized operations as mentioned in the Letter of Approval of the Development Commissioner as per Section 15(9) of the SEZ Act – In the case details provided by the applicant in Case IV, it is not forthcoming whether 'B Ltd' is an authorized unit in SEZ as per Section 15 (9) o
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Borhade (Member) and Pankaj Kumar (Member) PROCEEDINGS (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as "the CGST Act and the MGST Act"] by Merit Hospitality Services Private Ltd., the applicant is seeking an advance ruling in respect of the following questions : The company is registered as "Outdoor Caterers" under the GST Act. It was also registered in the same category under service tax regime The company is engaged in the business of supply, by way of and as a part of and in any other manner whatsoever of goods, being food and any other article for human consumption or drink. In nutshell it is providing snacks and food for breakfast, lunch, evening tea and dinner to the employees of various companies. The food
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sis and payment is received from the company to Merit Hospitality directly as per the terms of payment mentioned in the contract. Question: Whether on the facts and circumstances of abovementioned case can the above activity be called as canteen activity and the applicable rate of 5% be charged on our bills? Case II) The facts mentioned in Case I remains the same except that in addition to supply of food on the request of the client Merit Hospitality Services Pvt. Ltd. also undertake the services of distribution of food for which Merit Hospitality raises separate bill charging 18% GST/SGST Question : Can both the activities put together i.e. supply and distribution of food to the employees of 'A' ltd as canteen services and applicable rate of 5% be charged on our bills? Case III) The employees of 'A' Ltd. have formed "Employees Co-op. Society " which is registered under The Societies Registration Act. The Employees Co-op. Society is running a canteen for the e
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nd hence applicable GST rate is 5% only? At the outset we would like to make it clear that the provisions of both the CGST Act and the MGST 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, as reproduced verbatim, could be seen thus – "Provisions of law, applicants view point & submissions on issues on which advance ruling is sought. The services under discussion fall under SAC classification No 996333 Where under notification no [Serial No. 7(i) of notification No. 11/2017-CT (Rate) as amended vide notification No. 46/2017-CT (Rate) dated
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ue of running a canteen for its employees by a company either by itself or through an outside caterer is on the same line and hence should be considered under the same principles where it is clarified that tax rate will be 5% without input tax credit as such services fall under category (i)under column 3 of serial no 7 notification No. 46/2017-CT (Rate) dated 14.11.2017" 03. CONTENTION – AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- " 1. Case I) Question: Whether on the facts and circumstances of above mentioned case can the above activity be called as canteen activity and the applicable rate of 5% be charged on our bills? Reply: No Comments: The activity of canteen is to supply services to beneficial members. In this case it is agreement of supply of food and Beverages to another company. This activity falls under the outdoor catering. The notification Dt. 28.06.2017 vide entry No.7 under Heading 9963 ( Accommodation food and bevera
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company on the basis of agreement and hence it is purely outdoor catering service. Further the notification dt. 14.11.2017 has not changed the position of the supply by outdoor caterers given in original notification dt. 28.06.2017 in Clause V. Hence, the activity of the dealer cannot be called as canteen activity and liable to pay tax @ 9% as outdoor caterer. 2. Case 2) Question : Can both the activities put together i.e. supply and distribution of food to the employees of 'A' Ltd. be called as canteen services and applicable rate of 5% be charged on our bills ? Reply: No Comment: As above 3. Case 3) Question : Can such circumstances can it still be claimed that Merit Hospitality is running a canteen and the applicable rate of 5% be charged on our bills ? Reply: No Comment: As above 4. Case 4) Question: (a) Can Merit Hospitality claim that since the food is supplied directly to SEZ area hence no GST is applicable ? or (b) Can Merit Hospitality claim that it is running a cante
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her article for human consumption or drink is supplied, The agreement made with Colgate Global Business services Pvt. Ltd. clearly mentions that the arrangement is on principal to principal basis and payment to be made by company directly to the contractor as per annexure B of the agreement. Further it mentions that contractor has agreed to provide catering services to the company at the canteen premises of L & T business park. Further there is no relevance of employees (who are ultimate beneficiary of the catering services) with the contractor as per the terms and conditions of the agreement as supply made by the contractor for valuable consideration is to the company. Hence catering service of the contractor can not to be treated as supply by canteen and GST will be applicable at the rate 9% each under CGST & SGST. 2 2. Case 2) Question : Can both the activities put together i.e. supply and distribution of food to the employees of 'A' Ltd. be called as canteen service
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available if the catering service is provided to the educational institution which runs canteen or mess for its students, faculty and staff. Hence applicable rate will be 9% each under CGST & SGST. 4 4. Case 4) Question : (a) Can Merit Hospitality claim that since the food is supplied directly to SEZ area hence no GST is applicable? or (b) Can Merit Hospitality claim that it is running a canteen in SEZ area hence no GST is applicable? or (C) Can Merit Hospitality claim that it is running a restaurant in SEZ area and hence applicable GST rate is 5% only? M/s.UBS Business Solutions (India) Pvt. Ltd. As per the terms and condition of the agreement, the supplier has to provide catering service and staff cafeteria in the office premises of UBS Though the supply is made to the SEZ area, same is not relevant with the purpose of the SEZ. Further it can not be treated as restaurant in SEZ area. Hence, the GST will be applicable at rate of 9% each under CGST & SGST. 04. HEARING The case
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ence as presented. However, the fact common to all, as informed, is that the food is prepared at the applicant's own kitchen and is distributed to various companies at different locations. The situations could be seen thus – Case I The company (Merit Hospitality) has entered into a contract for supply of food to the employees of the company say 'A' Ltd. The contract is signed between Merit Hospitality and 'A' Ltd for supply of food. As per the terms of contract Merit Hospitality has to supply the food at 'A' Ltd.'s premises. The distribution of the food is directly done by the staff of 'A' Ltd. The menu and the material specifications are mentioned in the contract and also the rate for various items are pre-determined between Merit Hospitality and the company. The billing is done by Merit Hospitality directly to the company on monthly basis and payment is received from the company to Merit Hospitality directly as per the terms of payment mentione
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facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year nor having licence or permit or by whatever name called to serve alcoholic liquor for human consumption. 6 – (ii) Accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of a unit of accommodation of one thousand rupees and above but less than two thousand five hundred rupees 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. 6 – (iii) 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 any drink, where such supply
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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 of a unit of accommodation of two thousand five hundred rupees and above but less than seven thousand five hundred rupees 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. 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 considera
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case of services by a restaurant, eating joint including mess and canteen as per relevant entry produced above. In order to ascertain whether the activities of the applicant would fall under Sr. No. 7, Heading 9963(i) of the above referred Notification, we would be required to examine as to what a restaurant, eating joint, mess and canteen are. We find that "restaurant", as per Cambridge English Dictionary is : "a place where meals are prepared and served to customers". "A place of business where people can choose a meal to be prepared and served to them at a table, and for which they pay, usually after eating. However we find that with the progress of time and civilization and further increasing demands and expectations from restaurants by customers and also the restaurants with intent to further grow their businesses have started providing "take away" or even "home delivery" services to customers as per their instant order out of the items
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aurant, that "canteen" is a small cafeteria or snack bar, especially one in a military establishment, school or place of work while "restaurant" is an eating establishment in which diners are served food at a table and it is outside the premises of military establishment, school or place of work. Thus broadly we find that "a canteen is mostly referred to as an eating place provided by an organization, college, university, military, police, government, for the staff/students workforce. In the present application we find that the applicant has clearly stated that they are not providing services to any college, university, military, police or government but to only business organizations or companies or their employees as per different situations mentioned by the applicant in his application. Thus in view of their question in regard to Case-I, we are required to check if their services as per Case-I can fall under providing of canteen services in a company or indu
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facilities inside it and mostly facilities such as empty LPG cylinder, furniture, refrigerator, water cooler, cooking and serving utensils etc. being all or some of these items are provided by the company on returnable basis in good and proper condition. (3) Generally water and electricity is also provided by the company on chargeable or maybe non chargeable basis. (4) Most of the food, snacks or tea and coffee are generally cooked or prepared in tine canteen itself. (5) 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. (6) The contractor may be required to serve to employees by counter service or even table service in respect of senior officials of the company. (7) The company communicates to the contractor only approximate estimated quantity con
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specific type of restaurant that mainly serves fast food cuisine and has minimal table service. In the same way we find that in common parlance a "mess" is a place where soldiers/police or any other organized force persons eat their food. On going through the situation as per submissions made by the applicant as per Case-I and corresponding details in respect of this situation claimed to be represented and submitted by the applicant as per copy of submitted agreement between Colgate Global Business P. Ltd. and Merit Hospitality Services P Ltd dated 01.12.2017, we find that the details as per Case-I submitted by the applicant in his Advance Ruling application are not in complete congruence with the details as visible in the agreement referred above and in view of this we will take up the issue for decision taking into consideration the facts and details as submitted by the applicant as per Case-I in the application and not as per claimed representative contract as submitted.
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e company say 'A' Ltd. The contract is signed between Merit Hospitality and 'A' Ltd for supply of food. /Is per the terms of contract Merit Hospitality has to supply the food at 'A' Ltd.'s premises. The distribution of the food is directly done by the staff of' A' Ltd. The menu and the material specifications are mentioned in the contract and also the rate for various items are pre-determined between Merit Hospitality and the company. The billing is done by Merit Hospitality directly to the company on monthly basis and payment is received from the company to Merit Hospitality directly as per the terms of payment mentioned in the contract. Question: Whether on the facts and circumstances of abovementioned case can the above activity be called as canteen activity and the applicable rate of 5% be charged on our bills ?". From the detailed facts as given by the applicant in Case-I and our detailed discussions above in respect of restaurant, canteen,
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and rate are as per contract of supply of food entered into between the applicant and M/s A Ltd. (v) The billing is done by the applicant directly to M/s A Ltd. on monthly basis and the payment is received from M/s A Ltd. as per contract. Thus as per the above details and discussions it is clearly visible that the service being provided by the applicant would not be covered under Serial No. 7 Heading 9963 (i) of Notification No. 11/2017 as amended. Now as we find that the services of the applicant are not covered under the above entry of Notification No. 11/2017 where the applicable rate of tax is 5%, therefore we are required to ascertain as to where the service being provided by the applicant would fall and what would be the tax rate applicable to them. In view of this now we examine the definition of "caterer" and "outdoor caterer" and see if the services being provided by the applicant merit classification under this service and would be liable to tax accordingl
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n before us, the applicant himself has stated that they are registered as outdoor caterers under the GST Act and that the company is engaged in the business of supply, by way of and as a part of and in any other manner whatsoever of goods, being food and any other article for human consumption or drink. In nutshell that it is providing snacks and food for breakfast, lunch, evening tea and dinner to the employees of various companies and that the food is prepared at their own kitchen and it is distributed to various companies at different locations and it is also visible that the applicant is providing the services at a place which is not his own and is neither provided to him by way of tenancy and nor in any other way. Further in respect of details as given in Case-I we find that the company in its contract with "A Ltd", they have to supply the food at A Ltd.'s premises and the distribution of food is directly done by the staff of A Ltd,. The menu and the material specifi
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he above classification of the services being provided by the applicant as per Case-I details would be taxable under Serial No. 7 Heading 9963 (v) @ 18% under GST as applicable. Case II) The facts mentioned in Case I remains the same except that in addition to supply of food on the request of the client Merit Hospitality Services Pvt. Ltd. also undertake the services of distribution of food for which Merit Hospitality raises separate bill charging 18% GST/ SGST Question: Can both the activities put together i.e. supply and distribution of food to the employees of 'A' Ltd. be called as canteen services and applicable rate of 5% be charged on our bills? In view of the detailed discussions in respect of Case-I above, the undertaking of additional responsibility of services of distribution of food by the applicant would in no way impact the classification or taxability of the services being provided by the applicant as per discussions in respect of Case-I above. Case III) The emplo
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bove. Case IV) The Merit Hospitality has entered into a contract with a company called say "B" Ltd. "B" Ltd. is having its unit in SEZ area (Special Export Zone). The supply of food is done by Merit Hospitality to the employees of "B" Ltd. and payment for the same is made by the employees of "B" Ltd. directly to Merit Hospitality. Case IV – Question a) a) Can Merit Hospitality claim that since the food is supplied directly to SEZ area hence no GST is applicable? In view of the details given in Case-IV above we would be required to examine the provisions of IGST Act, 2017 and SEZ Act, 2005. We find that Section 16 (1) of the IGST Act relating to 'zero rated supply' reads as under;- "zero rated supply" means any of the following supplies of goods or services or both, namely:- (a) Export of goods or services or both; or (b) Supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. We
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in compliance of procedure prescribed in Section 15 of the SEZ Act, 2015 can be called a SEZ unit. Section 15 of the SEZ Act, 2005 is reproduced as under:- 15. (1) Any person, who intends to set up a Unit for carrying on the authorised operations in a Special Economic Zone, may submit a proposal to the Development Commissioner concerned in such form and manner containing such particulars as may be prescribed: Provided that an existing Unit shall be deemed to have been set up in accordance with the provisions of this Act and such Units shall not require approval under this Act. 15. (2) On receipt of the proposal under sub-section (1), the Development Commissioner shall submit the same to the Approval Committee for its approval. 15. (3) The Approval Committee may, either approve the proposal without modification, or approve the proposal with modifications subject to such terms and conditions as it may deem fit to impose, or reject the proposal in accordance with the provisions of sub-sec
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ided that before disposing of an appeal, the appellant shall be given a reasonable opportunity of being heard. 15.(8) The Central Government may prescribe,- (a) the requirements (including the period for which a Unit may be set up) subject to which the Approval Committee shall approve, modify or reject any proposal referred to in sub-section (3); (b) the terms and conditions, subject to which the Unit shall undertake the authorised operations and its obligations and entitlements. 15. (9) The Development Commissioner may, after approval of the proposal referred to in sub-section (3), grant a letter of approval to the person concerned to set up a Unit and undertake such operations which the Development Commissioner may authorise and every such operation so authorised shall be mentioned in the letter of approval. From the detailed provisions of Section 16 of the IGST Act and Section 15(1) to 15(9) of the SEZ Act, we find that the benefit of zero rated supply to domestic unit will be allow
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Ltd or its employees is covered under authorized operations as allowed/approved by the Development Commissioner. If it is not covered under authorized operations then this supply of food by the applicant to SEZ employees would not be eligible for the benefit of zero rated supply. Case IV – Question b) b) Can Merit Hospitality claim that it is running a canteen in SEZ area hence no GST is applicable? In view of the detailed discussions in respect of situations of Case-I, Case-II and Case-Ill above, it is clear that the applicant cannot claim that they are running a canteen in SEZ. Rather their service would be in the nature of outdoor catering service as per discussions in detail above. Case IV – Question c) c) Can Merit Hospitality claim that it is running a restaurant in SEZ area and hence applicable GST rate is 5% only? In view of the detailed discussions in respect of situations of Case-I, Case-II and Case-Ill above, the applicant cannot claim that they are running a restaurant in
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ply and distribution of food to the employees of 'A' Ltd. be called as canteen services and applicable rate of 5% be charged on our bills? A. Answered in the negative. Case III Q. Under such circumstances can it still be claimed that Merit Hospitality is running a canteen and the applicable rate of 5% be charged on our bills? A. Answered in the negative. Case IV Q.a Can Merit Hospitality claim that since the food is supplied directly to SEZ area hence no GST is applicable? A.a In view of the findings above the said question cannot be answered. Q.b Can Merit Hospitality claim that it is running a canteen in SEZ area hence no GST is applicable? A. b In view of the detailed discussions above, the question is answered in the negative. Q.c Can Merit Hospitality claim that it is running a restaurant in SEZ area and hence applicable GST rate is 5% only? A.c In view of the detailed discussions above, the question is answered in the negative. – Case laws – Decisions – Judgements – Ord
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