5% GST Applicable on Food supply to Hospitals w.e.f. 2018 on Outsourcing basis, subject to ITC on Goods and Services not taken: AAR [Read Order]

The Telangana Bench of Authority for Advance Ruling (AAR) has ruled that 5% Goods and Services Tax (GST) is applicable on the food supplied to hospitals including Government hospital, private hospitals and autonomous bodies with effect from 2018 on outsourcing basis.

The bench further mentioned that the same is subject to a condition that Input Tax Credit is charged on goods and services used in supplying the services has not been taken.

The applicant, M/s. Navneeth Kumar Talla deals with supply of food to MNG Cancer Hospital Hyderabad (Autonomous Body) on outsourcing basis to patients of MNG Cancer Hospital.

The applicant requested to clarify whether Food supplied to Hospitals i.e. Government Hospitals, Private Hospitals and Autonomous Bodies on outsourcing basis are chargeable to Goods and Services Tax (GST).

Ashok Kumar, the Authorised representative (AR) of M/s. Navneeth Kumar Talla has appeared for the personal hearing and reiterated the following written submissions which were already submitted.

It was asserted that as per the Notification No. 8/2017- Integrated Tax (Rate), dated 28-06-2017, supply, by way of or as part of any service or in any other manner as part of such outdoor catering and such supply or service is for cash, deferred payment or other valuable consideration the rate of tax is 18%.

Additionally, the Hospital Authorities have filed a letter to the Commissioner (ST) for clarification of the rate of tax under GST regarding supply of food to hospitals. However, the Commissioner (ST) replied that 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.

The two member bench of J. Laxminarayana and B. Raghu Kiran, IRS observed that 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 supplies food to consumers who don’t make payment to the applicant.

The Bench further ruled that the applicant is making supply of services in the dining space of the hospitals which is occasional or in event. It is squarely covered in the Explanation 1 to Sl.No 7(i) of Notification No. 13/2018. Thus 5% Goods and Services Tax (GST) is applicable on the same.

To Read the full text of the Order CLICK HERE

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