GST UPDATE ON SUPPLY OF FOOD BY EDUCATIONAL INSTITUTION

GST UPDATE ON SUPPLY OF FOOD BY EDUCATIONAL INSTITUTION:-

The rate of tax on services of supply of food and beverages has been amended a number of times and there is no end to the confusion prevalent in the minds of the assessees. The rate of tax on supply of food and beverages in a restaurant was earlier dependent on the availability of facility of air conditioner which has been dispensed with as of now. The applicable rate of GST on supply of food and beverages in standalone restaurants is 5% without ITC. The content of the relevant entry no. 7 of the notification no. 11/2017-Central Tax (Rate) dated 28.06.2017 (prior to amendment) is produced hereunder for the sake of convenient reference as follows:-
Supply, by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied, other than those located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent.

Explanation 1.- This item includes such supply at a canteen, mess, cafeteria or dining space of an institution such as a school, college, hospital, industrial unit, office, by such institution or by any other person based on a contractual arrangement with such institution for such supply, provided that such supply is not event based or occasional.
However, there has been confusion as regards the applicability of exemption as contained in serial no. 66(a) of the notification no. 12/2017-Central Tax (Rate) which states that there is absolute exemption to services provided by an educational institution to its students, faculty and staff. It is being interpreted that the two notifications are conflicting. It is clarified vide Circular No. 85/04/2019-GST dated 01.01.2019 that if the educational institution supplies food and beverages to its students, faculty and staff, there is exemption.
However, if such supply of food and beverages is by any person other than the educational institutions based on a contractual arrangement with such institution, GST is leviable @ 5%.

Consequently, the words ‘school, college’ have been deleted in the Explanation no. 1 to entry 7(i) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. This omission has been done vide notification no. 27/2018-Central Tax (Rate) dated 31.12.2018. Therefore, the explanation after amendment reads as follows:-
Explanation 1.- This item includes such supply at a canteen, mess, cafeteria or dining space of an institution such as hospital, industrial unit, office, by such institution or by any other person based on a contractual arrangement with such institution for such supply, provided that such supply is not event based or occasional.
As the serial no. 66 only provides exemption to services provided by educational institution to its students, faculty and staff, the supply of food and beverages by third person to students would attract GST at the rate of 5%.

Furthermore, the service accounting code for supply of food and beverages being 9963 is being included in the serial no. 66 pertaining to exemption to services provided by educational institution to its student, faculty and staff thereby leaving no room for doubt that supply of food by educational institution to its students/faculty is not liable to GST. This has been done vide notification no. 28/2018-Central Tax (Rate) dated 31.12.2018.

It can be concluded that the government is active in resolving the confusion prevalent as regards interpretation of various notifications which is a good signal for the assessees.

This is solely for the educational purpose.

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GST UPDATE ON SUPPLY OF FOOD BY EDUCATIONAL INSTITUTION

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