The Central Board of
Indirect Taxes and Customs (CBIC) has withdrawn its circular clarify GST rate (5%) applicable
on catering services, i.e., supply of food or drink in a mess or canteen in an
educational institute and on supply of food and/or drinks by the Indian
Railways or Indian Railways Catering and Tourism Corporation Ltd. or their
licensees, in trains or at platforms (static units).
Earlier, the Board
had issued an order clarifying that Uniform rate of Goods and Services Tax
applies on these services.
In January, it was
also clarified that the supply of food or drink provided by a mess or canteen
is taxable at 5% without Input Tax Credit under the current Goods and Services
Tax regime. However, a few rulings by the Advance Ruling Authority of the
different States had took a different view and held that a higher tax rate of
18 percent is applicable to such services. However, the last meeting of the GST
Council held on 21st July had cleared the ambiguity on the tax rates applicable
on these services and decided to rationalize entry relating to the composite
supply of food and drinks in the 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.
Accordingly, a
circular no. 50, dated 31st July 2018 has been issued by CBIC
stating, Circular No. 28/02/2018-GST, dated 08.01.2018 as amended vide Corrigendum
dated 18.01.2018 and Order No 02/2018-Central Tax dated 31.03.2018 is withdrawn
w.e.f 27.07.2018. Difficulty if any, in the implementation of this Circular may
be brought to the notice of the Board.
Extracts of CBEC
Circular No. 28/02/2018 GST dt. 8 Jan. 2018
1. Queries have been
received seeking clarification regarding the taxability and rate of GST on
services by a college hostel mess. The clarification is as given below:
2. The educational
institutions have mess facility for providing food to their students and staff.
Such facility is either run by the institution/ students themselves or is
outsourced to a third person. Supply of food or drink provided by a mess or
canteen is taxable at 5% without Input Tax Credit [Serial No. 7(i) of
notification No. 11/2017-CT (Rate) as amended vide notification No. 46/2017-CT
(Rate) dated 14.11.2017 refers]. It is immaterial whether the service is
provided by the educational institution itself or the institution outsources the
activity to an outside contractor.
Extracts of
Corrigendum dt. 18
Jan. 2018 to CBEC Circular No. 28/02/2018 GST dt. 8 Jan. 2018
In Para 2 of the
said circular,
for
“It is immaterial
whether the service is provided by the educational institution itself or the institution
outsources the activity to an outside contractor.”
read
“2.1 If the catering
services is one of the services provided by an educational institution to its
students, faculty and staff and the said educational institution is covered by
the definition given under para 2(y) of notification No. 12/2017-Central Tax
(Rate), then the same is exempt. [Sl. No. 66(a) of notification No.
12/2017-Central Tax (Rate) refers]
2.2 If the catering
services, i.e., supply of food or drink in a mess or canteen, is provided by
anyone other than the educational institution, then it is a supply of service
at entry 7(i) of notification No. 11/2017-CT (Rate) [as amended vide
notification No. 46/2017-CT (Rate) dated 14.11.2017] to the concerned
educational institution and attracts GST of 5% provided that credit of input
tax charged on goods and services used in supplying the service has not been
taken, effective from 15.11.2017.”
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