The Authority of Advanced Ruling (AAR) for the goods and services tax (GST) has ruled that firms supplying food and beverages to canteens of other organisations are ‘outdoor caterers’ and the service would attract an 18% GST.
The ruling was delivered by Gujarat AAR on an application filed by Rashmi Hospitality Services. The firm is engaged in supplying food, beverages and other eatables at various places of their customers having in-house canteens at their factories.
The authority said the assessee provides services from other than its own premises to the recipient. So, the nature of service provided by the applicant is that of an outdoor catering service.
AAR said the applicant was providing service to the recipient and not to workers/employees of the recipient. Thus, the services were not in the nature of those provided by a restaurant, eating joints including mess and canteen, and hence can’t levy a 5% GST.
“AAR rules that an outdoor caterer in connection with catering services being provided at premises of corporate canteens would now be liable to tax at a flat rate of 18%, and not at a rationalised rate of 5%. This ruling is bound to increase the input cost for all establishments providing free meals or meals at subsidised prices to employees,” Rajat Mohan, partner, AMRG & Associates, said.