The Authority for Advance Rulings (AAR), Tamilnadu has held that the supply of food and beverages in the offices by the caterers would attract 5 percent GST after 26th July 2018.
The applicant renders catering services to various companies. They prepare food in their place and supply to the employees of their clients/companies. The said companies provide them the rent-free space to distribute the food to the employees of the companies. They purchase materials and use their own manpower in cooking and distributing food.
The applicant wanted an advance ruling that the catering services provided by them would attract 5 percent GST with effect from 28.06.2017 as per the CBIC Notification.
The AAR held that “the applicant is making supply of services in the dining space of the industrial units and offices which is squarely covered in the Explanation 1 to Sl.No 7(i) and 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. T(i)of the Notification No. 71/2017- CT (Rate) with effect from 27th July 2018 and thereupon is liable to tax at the rate of S% subject to the condition that credit of input tax charged on goods and services used in supplying the services are has not been taken read with Explanation (iv) of said Notifications.”
The tax rate applicable to outdoor catering had been a debatable issue. The 28th meeting of the GST Council has decided to rationalize entry relating to the composite supply of food and drinks in restaurant, mess, canteen, eating joints and such supplies to institutions (educational, office, factory, hospital) on contractual basis at GST rate of 5%. The Council made it clear that the scope of outdoor catering under 7(v) is restricted to supplies in case of outdoor/indoor functions that are event-based and occasional in nature.
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