Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *   CBIC issues draft rules for Customs valuation *  Top Headlines: Threshold for Benami deals, green bond investors, and more *  Govt aims 1-hour clearance for goods at all ports *  Exporters Allowed To Use RoDTEP, RoSCTL Scrips To Pay Customs Duty, Transfer Them; Rules Amended *  Millions of labourers to be affected by brick producers’ strike over hike in GST, coal rates *  Inauguration of ‘kendriya GST parisar’ *  Transporter can seek Release of Conveyance alone, not Goods under GST Act: Madras HC *  GST: Quoting of DIN Mandatory for Responding to Notice, Govt Modifies Portal *  Firms can soon file claims for GST credits of ?400 cr *  CBIC issues modalities for filing transitional credit under GST. *  Mumbai: Man creates 36 fake GST firms, arrested for input tax credit fraud of Rs 23 cr *  Report to restructure Commerce Ministry under study; idea is to set up trade promotion body: Goyal *  Firms can soon file claims for GST credits of ?400 cr *  Gambling Alert! Govt May Levy Up To 28% GST; UP, Bengal Back Move *  EPFO backs raising retirement age to ease pressure on pension funds *  India Moving Up Power Scale, Set to Become Third Largest Economy By 2030 *  Airfares Get Expensive: What Changes for Flyers From Today? *  IRCTC Latest News: Passengers to Pay More For Cancelling Confirmed Rail Tickets Soon. *  IBC prevails over Customs Act, says Supreme Court. *  As GST enters sixth year, a time for evaluation and reassessment *  There’s GST on daily essentials as Centre needs money to buy MLAs: Arvind Kejriwal *  Now, GST on cancellation of confirmed train tickets, hotel bookings *  GST kitty for top States could rise 20% in FY23, says Crisil *  French customs officials seize another cargo vessel over Russia sanctions *  TradeLens builds on Asia momentum with Pakistan Customs deal *  Hike tax on tobacco, reduce affordability & increase revenue: Civil society organizations to GST council *  Bihar: ?10 crore tax evasion on tobacco products detected in raids *  Centre failed on GST, COVID; would it be anti-national? Rajan on Infosys row *  Service Tax not Chargeable on Income Tax TDS portion paid by recipient: CESTAT grants relief to TVS *  Foreign portfolio investors make net investment of Rs 7575cr in Sep so far
Subject News *  Run-up to Budget: Monetary threshold for GST offences may rise to Rs 25 cr *   GST (Tax) E-invoice Must For Businesses With Over Rs 5 Crore Annual Turnover *   Both Central GST and excise duty can be imposed on tobacco, rules Karnataka high court *   CBIC Issues Clarification On Extended Timelines For GST Compliance *   CBIC Issues Clarification On Extended Timelines For GST Compliance *  Budget 2023- 9.6 crore gas connections *  GST: Tamil Nadu Issues Instructions for Assessment and Adjudication Proceedings *  GST: CBIC Extends Last Date for filing of ITC *  GST collection in September surpasses Rs 1.4 lakh crore for straight seventh time *  Dollar smuggling case: Customs chargesheet names M Sivasankar as key conspirator. *  Hike in GST rates fuels inflation *  Assam: CBI arrests GST commissioner in Guwahati *  GST fraud worth ?824cr by 15 insurance Cos detected *  India proposes 15% customs duties on 22 items imported from UK *  Decriminalising certain offences under GST on cards *  Surge in GST collections more due to higher inflation: India Ratings *  MNRE Notifies BCD and Hike in GST Rates as ‘Change in Law’ Events But With a Condition | Mercom India *   Solar projects awarded before customs duty change allowed cost pass-through *  Rajasthan High Court Dismisses Writ Petitions Challenging Levy Of GST On Royalty *   GST revenue in September likely at Rs 1.45 lakh crore *  Govt working on decriminalising certain offences under GST, lower compounding charge *  Building an institution like GST Council takes time, trashing is easy: Sitharaman *  GST collections in Sept may touch ?1.5 lakh crore *  KTR asks Centre to withdraw GST on handlooms *  After Gameskraft, More Online Gaming Startups To Receive GST Tax Claims *  Madras HC: AAR Application Filed Under VAT Does Not Survive After GST Enactment *  Threshold for criminal offences under GST law may be raised *  Bengaluru: Gaming company faces biggest GST notice of Rs 21,000 crore *  CBIC clarifies Classification of Cranes for GST, Customs Duty *  Customs seize gold hidden in bicycle in Kerala airport  

Comments

Print   |    |  Comment

PJ/Case Law/2018-2019/3501

Taxability of food supplied to employees of a SEZ Unit and classification of service provided
 
Case:  M/s MERIT HOSPITALITY SERVICES PVT LTD

Citation: ORDER NO.MAH/AAAR/SS-RJ/12/2018-19 dated 01.11.2018

Issue:Taxability of food supplied to employees of a SEZ Unit and classification of service provided
 
Brief Facts:The appellant company M/s MERIT HOSPITALITY SERVICES PVT LTD is in the business of providing catering services to the business and corporate and is registered under the category of “outdoor caterers” and provides food to the employees of its client at client’s premise, although the food is prepared in appellant’s premises and transported to client place.
Appellant has entered into a contract with say B Ltd and it is having its unit in SEZ area. Supply of food is done by Appellant to the employees of "B Ltd." and the payment for the same is made by the employees of "B Ltd." to the appellant directly.
Appellant had sought a ruling as to whether such supply can be considered as supply to SEZ area and hence no GST should be charge on supply. The Authority for Advance Ruling had rejected the case on the ground that there is lack of clarity on the issue in absence of adequate information or details.Now the appellant preferred appeal to the order of AAR.
 

Appellant’s contention: The Applicant sought clarification primarily as to:
  • Whether the activity undertaken by the applicant can be called as canteen activity and the applicabe rate of 5% be charged on their bill?
  • Can applicant claim that food being supplied to employees of SEZ unit, for which employees of SEZ unit directly make payment, is a supply made to SEZ unit and hence no GST payable?
 
Observations of Honorable Bench and Decisions: Hon’ble AAAR observed that as per provisions of Section 16 of IGST Act, 2017; Zero Rated supply of goods or services means supply of goods or services or both to a SEZ Unit. Supply of food has been made by the appellant to the employees of the units located in SEZ Area and it cannot be construed as zero rated supply as employees cannot be treated as SEZ Unit. 
To the second question Honorable bench reiterated that the appellant is registered under the law as “outdoor caterer” and not as a “restaurant” hence the question of charging tax at the rates applicable to such restaurants is irrelevant for the appellantand hence the caterer should continue to charge tax at the rate prescribed for his relevant category.     
 
Comment:  Circular No. 48/22/2018-GST Dated 14th June 2018 provides that; if hotel, accommodation services, consumables etc. are received by a SEZ unit for authorised operations, as endorsed by the specified officer of the Zone, the benefit of zero rated supply shall be available in such cases to the supplier.  Supply by a domestic unit to the employee of SEZ unit can only be claimed to be zero-rated if it is authorised unit and the supply made by applicant to employees of SEZ unit is authorized operation. But the factor considered whie giving this ruling that payment of food was being made by the employees to the appellant therefore supply of food has been held to be supply to employees and not to SEZ Unit even though the contract for supply has been entered with SEZ Unit.
In the second question, the authority has not taken a broader view and held that since the place of cooking and serving to the employees is different, therefore this event is not covered under the definition of restaurant. Hence, the applicable rate would be 5%. 
 
 
 
Prepared by: Shubhanshu P. Jain
 
 
 
Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com