2018 (10) TMI 1052 – AUTHORITY FOR ADVANCE RULING, TAMILNADU – TMI – Application for withdrawal of advance ruling application – Whether entry 7 (i) covers canteens located in any establishment and Circular No. 28/02/2018-GST applies to canteens located in any type of establishment and liable to 5% GST vide Notification No. 11/2017-CT (Rate) as amended vide notification No. 46/2017-CT (Rate) dated 14.11.2017?
–
The application filed by the Applicant for advance ruling is dismissed as withdrawn. – 11/AAR/2018 Dated:- 27-9-2018 – Ms. Manasa Gangotri Kata, Member, And Thiru S. Vijayakumar, Member ORDER Note: Any appeal against the advance ruling order shall be filed before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai under Sub-section (1) of Section 100 of CGST ACT/TNGST Act 2017 within 30 days from the date on which the ruling sought to be appealed against is communicated At the outset, we would like to make it clear that the provisions of both the Central Go
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
any establishment and Circular No. 28/02/2018-GST applies to canteens located in any type of establishment and liable to 5% GST vide Notification No. 11/2017-CT (Rate) as amended vide notification No. 46/2017-CT (Rate) dated 14.11.2017 2.0 Sodexo have stated that they operate in India under three legal entities, Sodexo Foods Solutions India Private Limited (hereinafter referred to as applicant), Sodexo Facilities Management Services India Private Limited, and Sodexo Technical Services India Private Limited (collectively referred to as 'Sodexo India). Sodexo is interalia engaged in providing the following services: B2B contracts with corporate customers for operation and management of canteens, cafeteria's at their premises, wherein sodexo provides the services of cooking, preparing, serving of food and beverages at the premises of the customer; The consideration for services is charged to the corporate customers on a per plate basis; The contracts are for providing services on
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
and beverages to the consumers who visit the canteens / cafeteria as per the orders placed by the consumers and they charge the consumers as per the price menu and food and beverages ordered by the consumers. 2.1 As per recent Notification No. 46/2017- Central Tax (Rate) dated 14th November 2017, entry no. 7 (i), there has been a change in the GST rate from 18% to 5% with effective from 15th November 2017, in respect of supply of food and / or beverages by restaurant, eating joint including mess, canteen other than those located in the premises of having rooms with declared tariff of ₹ 7,500 per day or more. Accordingly, the implication of such amendment in the GST rate for services provided by a restaurant, eating joint, including mess canteen which do not have rooms with declared tariff of ₹ 7,500 or more per day has been reduced to 5% (with no input tax credit to the service provider). Further, the CBEC (TRU) has issued circular no. 28/02/2018-GST dated 8th January 2018
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ages by way of or as a part of a service in outdoor catering'. In the press release issued by the Government along with this amendment, it has been stated that 'Outdoor catering continue to be at 18% with full ITC'. 2.2 Sodexo have stated that the option to pay 5% GST without ITC by restaurants, eating joints, mess and canteens and the 18% GST rate for outdoor catering services seems to be simultaneously prescribed. Especially when the customers are not entitled to avail ITC of the GST charged by Sodexo, the clients are insisting that since the services are provided in canteens the appropriate rate of tax is 5%. Sodexo has a huge interest in knowing the correctness of the rate to be charged since GST is a pass through tax and the differential of 13% if not received from clients could spell disaster for the company. 2.3 Sodexo have further stated that, in the normal course, "outdoor catering" means ordering of food along with service thereof on the occasion of some
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
nion of India reported in 2004-TIOL-36-SC-ST, wherein vide Para 56, it had held the following in the case of Outdoor Caterers; "Outdoor catering has an element of personalized service provided to the customer. Clearly the service elements is more weighty, visible and predominant in the case of outdoor catering. It cannot be considered as a case of sale of food and drink as in restaurant". 2.4 Sodexo have further stated that on examining the classification of Food Services under the General Tariff Schedule under GST, it can be seen that Group 99633 deal with Food, Edible Preparations, Alcoholic and Non-alcoholic beverages serving services.; There are 8 sub categories under this group.; The First set comprising of 996331 to 996333 deal with services provided by Restaurants, café's, eating facilities including take away, room services and door deliver; Hotel, Inn, guest house, club and the like; canteen and other similar establishments.; These three sub entries featur
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ons where food is prepared and served on a continuous basis. The gradation as restaurant, cafe, canteen, hotel etc. are just finer efficacies meeting the specific type of dispensation but the basic Rule of food getting prepared and served in that location on a continuous basis remains constant. The design of the Group under the GST Tariff appears to have clarity and even an unintended overlap stands avoided. It is a well settled principle of interpretation that in case of competing entries, specific would prevail over general and consequently canteen even if held to be outdoor caterer would continue to fall under 7 (i) instead of getting it consigned to 7 (v) of the Notification. 2.5 GST rate of 5% extended to Educational Institutions vide Circular of 8 Jan 2018 is violative of Article 301 of the Constitution of India. Circular No. 28/02/2018-GS'I' dated 8th January 2018 read with Corrigendum issued on 18th January 2018 has clarified that GST shall be applicable at 5% under ent
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ch a differentiation is violative of Article 301 of the Constitution. ; In this regard, they refer to the decision of the Supreme Court of India in Firm A.T.B. Mehtab Majid vs State of Madras and And wherein the Hon'ble Court has clearly laid down that any taxation that is discriminatory in nature will offend Article 301.; They have claimed that in view of the above, it would be critical to clarify that supply of food and beverages in factory canteens, offices, hospitals, offshore rigs by services providers such as Sodexo should also attract 5% GST so that there is no discrimination in the GST tax structure for supply of food and drinks in the normal course of trade, commerce and intercourse across the territory of India. 3.0 The applicant was heard in person. They stated that they have contracts with various institutions.; they have contracts with them for making food at client premises; in certain cases, the payment is received from visitors to premises, in other cases payment is
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =