The Telangana State Authority for Advance Rulings ( AAR ) has held that the supply of food in canteens of office, factory and colleges on contractual basis taxable at the rate of 5% GST.
According to the ruling of the authority, the activity of supply of food in canteens of office, factory, hospital, college, industrial unit etc. on contractual basis excepting that supply is not event-based or on specific occasions, constitutes the supply of service.
The applicant is engaged in the business of Cleaning Services, maintenance of canteens in Industries, Educational establishments, providing food to student mess/s, training institutes and so on since the year 2005.
They provide transportation services to a training institute for carting food from one building to another for service/sale and applicant charges separate transport charges, the applicant needs to discharge GST on gross amount (cost of Food + cost of Transportation ) at the rate of 18% GST.
It was said that the food promoted by the applicant is of a working nature such as working lunch etc by saving the time of the employee and increase productivity whereas the menu served for the outdoor Catering in almost all the cases is of a superior nature befitting the event such as a wedding/party/conference.
Relying on the above notification, the authority held that the activity of supply of food in canteens of office, factory, hospital, college, industrial unit etc. on contractual basis excepting that supply is not event-based or on specific occasions, constitute supply of service in terms of amended Notification No.13/2018-Central Tax(Rate) dt.26.7.18 and is taxable at rate of 2.5% CGST + 2.5% SGST and the supplier is not eligible for the input tax credit as per the condition stipulated therein.
