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2018 (7) TMI 1492

Classification of services - Outdoor catering services or not? - company is engaged in the business of supply, by way of and as a part of and in any other manner whatsoever of goods, being food and any other article for human consumption or drink. - The company (Merit Hospitality) has entered into a contract for supply of food to the employees of the company say 'A' Ltd. - Merit Hospitality has to supply the food at 'A' Ltd.'s premises. The distribution of the food is directly done by the st .....

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ure to be noted is that in such cases there is no pre-entered agreement or contract between the restaurant or customers except for the expectations which the customer has as per reputation about food and services of the restaurant - the services being provided by the applicant would not fall under restaurant service. - The applicant himself has stated that they are registered as outdoor caterers under the GST Act and that the company is engaged in the business of supply, by way of and as a p .....

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of distribution of food by the applicant would in no way impact the classification or taxability of the services being provided by the applicant. - The employees of 'A' Ltd. have formed "Employees Co-op. Society " which is registered under The Societies Registration Act. The Employees Co-op. Society is running a canteen for the employees of 'A' Ltd. The contract of supply of food of Merit Hospitality is now with "Employees Co-op. Society " and not with "A " Ltd. - can it still be claimed tha .....

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lowed to a domestic unit only if supply of goods or services to a SEZ unit or developer is only in respect of authorized operations as mentioned in the Letter of Approval of the Development Commissioner as per Section 15(9) of the SEZ Act - In the case details provided by the applicant in Case IV, it is not forthcoming whether 'B Ltd' is an authorized unit in SEZ as per Section 15 (9) of the SEZ Act and as to what are the authorized operations of 'B Ltd' in SEZ and whether supply of food to B Lt .....

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x Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as "the CGST Act and the MGST Act"] by Merit Hospitality Services Private Ltd., the applicant is seeking an advance ruling in respect of the following questions : The company is registered as "Outdoor Caterers" under the GST Act. It .....

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lity has to supply the food at 'A' Ltd.'s premises. The distribution of the food is directly done by the staff of 'A' Ltd. The menu and the material specifications are mentioned in the contract and also the rate for various items are pre-determined between Merit Hospitality and the company. The billing is done by Merit Hospitality directly to the company on monthly basis and payment is received from the company to Merit Hospitality directly as per the terms of payment mention .....

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o-op. Society " and not with "A " Ltd. Question: Under such circumstances can it still be claimed that Merit Hospitality is running a canteen and the applicable rate of 5% be charged on our bills ? Case IV) The Merit Hospitality has entered into a contract with a company called say "B" Ltd. "B" Ltd. is having its unit in SEZ area ( Special Export Zone). The supply of food is done by Merit Hospitality to the employees of "B " Ltd. and payment for the s .....

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PPLICANT The submission, as reproduced verbatim, could be seen thus - "Provisions of law, applicants view point & submissions on issues on which advance ruling is sought. The services under discussion fall under SAC classification No 996333 Where under notification no [Serial No. 7(i) of notification No. 11/2017-CT (Rate) as amended vide notification No. 46/2017-CT (Rate) dated 14.11.2017 the rate of GST is stated at 2.5% as applicable to supply of food and beverages by a canteen' . .....

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e same line and hence should be considered under the same principles where it is clarified that tax rate will be 5% without input tax credit as such services fall under category (i)under column 3 of serial no 7 notification No. 46/2017-CT (Rate) dated 14.11.2017" 03. CONTENTION - AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- " 1. Case I) Question: Whether on the facts and circumstances of above mentioned case can the above activity be called a .....

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atering is "a caterer engaged in providing services in connection with catering at a place other than his own but including a place provided by way of tenancy or otherwise by the person receiving such services" Considering the above meaning the activity of the dealer cannot be considered as canteen activity as the dealer is in the business of supplying food and beverages to the company on the basis of agreement and hence it is purely outdoor catering service. Further the notification d .....

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in SEZ area and hence applicable GST rate is 5% only? Reply: No Comment: As above Additional submissions Sr. No. Merit Hospitality Case No. Agreement submitted by the dealers Remark 1 Case 1) Question: Whether on the facts and circumstances of above mentioned case can the above activity be called as canteen activity and the applicable rate of 5% be charged on our bills ? M/s Colgate Global Business services Pvt. Ltd. As per entry No. 7(i) of notification No. 46/2017- CT (Rate) Dt. 14.11.2017. (i .....

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ply made by the contractor for valuable consideration is to the company. Hence catering service of the contractor can not to be treated as supply by canteen and GST will be applicable at the rate 9% each under CGST & SGST. 2 2. Case 2) Question : Can both the activities put together i.e. supply and distribution of food to the employees of 'A' Ltd. be called as canteen services and applicable rate of 5% be charged on our bills? a) M/s Larsen & Toubro Limited. (Realty Division) In .....

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ts students, faculty and staff. Hence applicable rate will be 9% each under CGST & SGST. 4 4. Case 4) Question : (a) Can Merit Hospitality claim that since the food is supplied directly to SEZ area hence no GST is applicable? or (b) Can Merit Hospitality claim that it is running a canteen in SEZ area hence no GST is applicable? or (C) Can Merit Hospitality claim that it is running a restaurant in SEZ area and hence applicable GST rate is 5% only? M/s.UBS Business Solutions (India) Pvt. Ltd. .....

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agreements as referred to in the questions in their application. Jurisdictional Officer, Sh. J. P. Sakore, Dy. Commissioner GST(E-639) , LTU 4, Mumbai was present during both the hearings and has furnished a written submission in the matter. 05. OBSERVATIONS We have gone through the facts of the case. Four situations have been presented before us. We shall study each of these in the sequence as presented. However, the fact common to all, as informed, is that the food is prepared at the applicant .....

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ity be called as canteen activity and the applicable rate of 5% be charged on our bills? We find that the applicant desires to know whether his services as stated in the details as per Case I above would fall under canteen services and taxable @ 5%. We find that under Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017, under Serial No. 7 Heading 9963(i) covers accommodation, food and beverages services. The nature of services and the applicable tax rate on the same is as under:- 7 .....

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the unit of accommodation (given on rent for stay) like furniture, air conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit. 6 - (iii) Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink, where such supply or service is for cash, deferred payment or other valuable consideration, provided by a restaurant, eating joi .....

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clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of a unit of accommodation of two thousand five hundred rupees and above but less than seven thousand five hundred rupees per unit per day or equivalent. Explanation.- "declared tariff" includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air conditioner, refrigerators or any other amenities, but without excluding any .....

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on rent for stay) like furniture, air conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit. 14 - (ix) Accommodation, food and beverage services other than (i), (ii), (iii), (iv), (v), (vi), (vii) and (viii) above. 9 - We find that under this Notification after amendments uptill now GST @ 5% is chargeable in case of services by a restaurant, eating joint including mess and canteen as per relevant entry produced above .....

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ere is no pre-entered agreement or contract between the restaurant or customers except for the expectations which the customer has as per reputation about food and services of the restaurant. From the above broad essentialities of a restaurant we can easily see that the services being provided by the applicant as per details given in Case-I would not fall under restaurant service. Now we go to the definition of the word "canteen" as given in Sr. No. 7, Heading 9963(i) of Notification N .....

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iding services to any college, university, military, police or government but to only business organizations or companies or their employees as per different situations mentioned by the applicant in his application. Thus in view of their question in regard to Case-I, we are required to check if their services as per Case-I can fall under providing of canteen services in a company or industrial establishment. We find that every industrial establishment aims to gain maximum profit at minimum costs .....

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cooking and serving utensils etc. being all or some of these items are provided by the company on returnable basis in good and proper condition. (3) Generally water and electricity is also provided by the company on chargeable or maybe non chargeable basis. (4) Most of the food, snacks or tea and coffee are generally cooked or prepared in tine canteen itself. (5) The items are sold to the employees directly by the contractor at agreed prices which are mostly subsidized and the sale amounts are c .....

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onitored by designated officials of the company and they have full right to inspection of eatables, beverages, food prepared to ensure quality. (13) The contractor is required to engage his own employees and is required to follow statutory provisions as applicable. Further in reference to eating joint we find that an eating joint is a quick service restaurant within the industry and is a specific type of restaurant that mainly serves fast food cuisine and has minimal table service. In the same w .....

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"Outdoor Caterers" under the GST Act. It was also registered in the same category under service tax regime The company is engaged in the business of supply, by way of and as a part of and in any other manner whatsoever of goods, being food and any other article for human consumption or drink. In nutshell it is providing snacks and food for breakfast, lunch, evening tea and dinner to the employees of various companies. The food is prepared at our own kitchen and it is distributed to va .....

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pitality directly as per the terms of payment mentioned in the contract. Question: Whether on the facts and circumstances of abovementioned case can the above activity be called as canteen activity and the applicable rate of 5% be charged on our bills ?". From the detailed facts as given by the applicant in Case-I and our detailed discussions above in respect of restaurant, canteen, eating joint and mess we find in respect of the facts put before us by the applicant that,- (i) The company i .....

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ng is done by the applicant directly to M/s A Ltd. on monthly basis and the payment is received from M/s A Ltd. as per contract. Thus as per the above details and discussions it is clearly visible that the service being provided by the applicant would not be covered under Serial No. 7 Heading 9963 (i) of Notification No. 11/2017 as amended. Now as we find that the services of the applicant are not covered under the above entry of Notification No. 11/2017 where the applicable rate of tax is 5%, t .....

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purpose or occasion Further under the Finance Act, 1994 outdoor caterer was defined as "outdoor caterer" means a caterer engaged in providing services in connection with catering at a place other than his own but including a place provided by way of tenancy or otherwise by the person receiving such services. From the case details as submitted by the applicant in his application before us, the applicant himself has stated that they are registered as outdoor caterers under the GST Act a .....

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cant and M/s A Ltd. Further the billing is also done by the applicant to M/s A Ltd. on monthly basis and payment is also received by the applicant directly from M/s A Ltd. Thus as per the case details the service being provided by the company would clearly fall under Group 99633 - Food, edible preparations, alcoholic and non-alcoholic beverages serving services and further under service code 996337 - Other Contract Food Services which are in the nature of outdoor caterer services [food preparati .....

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rvices and applicable rate of 5% be charged on our bills? In view of the detailed discussions in respect of Case-I above, the undertaking of additional responsibility of services of distribution of food by the applicant would in no way impact the classification or taxability of the services being provided by the applicant as per discussions in respect of Case-I above. Case III) The employees of 'A' Ltd. have formed "Employees Co-op. Society " which is registered under The Socie .....

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"B" Ltd. is having its unit in SEZ area (Special Export Zone). The supply of food is done by Merit Hospitality to the employees of "B" Ltd. and payment for the same is made by the employees of "B" Ltd. directly to Merit Hospitality. Case IV - Question a) a) Can Merit Hospitality claim that since the food is supplied directly to SEZ area hence no GST is applicable? In view of the details given in Case-IV above we would be required to examine the provisions of IGST Ac .....

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under sub-section (12) of section 3. SEZ UNIT :- "Unit" means a Unit set up by an entrepreneur in a Special Economic Zone and includes an existing Unit, an Offshore Banking Unit and a Unit in an International Financial Services Centre, whether established before or established after commencement of this Act. Further we find that apart from an existing unit, a unit established in compliance of procedure prescribed in Section 15 of the SEZ Act, 2015 can be called a SEZ unit. Section 15 .....

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d a reasonable opportunity of being heard to the person concerned and after recording the reasons, either modify or reject the proposal. 15. (4) Any person aggrieved, by an order of the Approval Committee, made under sub-section (3), may prefer an appeal to the Board within such time as may be prescribed. 15. (5) No appeal shall be admitted if it is preferred after the expiry of the time prescribed therefor: Provided that an appeal may be admitted after the expiry of the period prescribed theref .....

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proval to the person concerned to set up a Unit and undertake such operations which the Development Commissioner may authorise and every such operation so authorised shall be mentioned in the letter of approval. From the detailed provisions of Section 16 of the IGST Act and Section 15(1) to 15(9) of the SEZ Act, we find that the benefit of zero rated supply to domestic unit will be allowable only if the supply of goods or services are to a SEZ unit and the SEZ unit is granted a Letter of Approva .....

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er. If it is not covered under authorized operations then this supply of food by the applicant to SEZ employees would not be eligible for the benefit of zero rated supply. Case IV - Question b) b) Can Merit Hospitality claim that it is running a canteen in SEZ area hence no GST is applicable? In view of the detailed discussions in respect of situations of Case-I, Case-II and Case-Ill above, it is clear that the applicant cannot claim that they are running a canteen in SEZ. Rather their service w .....

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-22/2017-18/B-29 Mumbai, dt. 05/05/2018 For reasons as discussed in the body of the order, the questions are answered thus:- Case I Q. Whether on the facts and circumstances of abovementioned case can the above activity be called as canteen activity and the applicable rate of 5% be charged on our bills? A. Answered in the negative. Case II Q. Can both the activities put together i.e. supply and distribution of food to the employees of 'A' Ltd. be called as canteen services and applicable .....

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