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Supply of food to Hospital on outsourcing basis to hospital patients shall be chargeable to 5% GST with no input w.e.f. 27.07.2018: Says AAR

Prior to 27.07.2018, GST @ 18% was chargeable on the above supply.

Facts of Case

The applicant is engaged in the business of supply of food to MNG Cancer Hospital Hyderabad (Autonomous Body) on out sourcing basis to patients of MNG Cancer Hospital.

The applicant requested to clarify:

(a) whether Food supplied to Hospitals i.e. Government Hospital, Private Hospitals and Autonomous Bodies on outsourcing basis, GST is chargeable?

(b) If GST is chargeable what is the tax rate? If no GST is chargeable on the Supply of food, the GST already paid by the Hospitals and remitted to Government is recoverable from their future bills?

Held by Authority

From 01.10.2019, the supply of food by the applicant to hospitals fall under entry no. (ii) of S. No. 7 of Not. No. 11/2017 - State Tax (Rate), issued in G.O.Ms No. 110, Revenue (CT-II) Department, Dt. 29-06-2017 and is subject to 5% GST with the condition of non-availability of input tax credit.

Serial number 7

(3)

(4)

(5)

“(i) Supply of ‘hotel accommodation’ having value of supply of a unit of accommodation above one thousand rupees but less than or equal to seven thousand five hundred rupees per unit per day or equivalent.

6

-

(ii) Supply of ‘restaurant service’ other than at ‘specified premises’

2.5

Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation no. (iv)]

(iii) Supply of goods, being food or any other article for human consumption or any drink, by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd. or their licensees, whether in trains or at platforms.

2.5

Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation no. (iv)]

(iv) Supply of ‘outdoor catering’, at premises other than ‘specified premises’ provided by any person other than-

(a) suppliers providing ‘hotel accommodation’ at ‘specified premises’, or

(b) suppliers located in ‘specified premises’.

2.5

Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation (iv)]

(v) Composite supply of ‘outdoor catering’ together with renting of premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organising a function) at premises other than ‘specified premises’ provided by any person other than-

(a) suppliers providing ‘hotel accommodation’ at ‘specified premises’, or

(b) suppliers located in ‘specified premises’.

2.5

Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation (iv)]

(vi) Accommodation, food and beverage services other than (i) to (v) above Explanation:

(a) For the removal of doubt, it is hereby clarified that, supplies covered by items (ii), (iii), (iv) and (v) in column (3) shall attract State tax prescribed against them in column (4) subject to conditions specified against them in column (5), which is a mandatory rate and shall not be levied at the rate as specified under this entry.

(b) This entry covers supply of ‘restaurant service’ at ‘specified premises’

(c) This entry covers supply of ‘hotel accommodation’ having value of supply of a unit of accommodation above seven thousand five hundred rupees per unit per day or equivalent.

(d) This entry covers supply of ‘outdoor catering’, provided by suppliers providing ‘hotel accommodation’ at ‘specified premises’, or suppliers located in ‘specified premises’.

(e) This entry covers composite supply of ‘outdoor catering’ together with renting of premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organising a function) provided by suppliers providing ‘hotel accommodation’ at ‘specified premises’, or suppliers located in ‘specified premises’.

9

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Thus, the supply of food to hospitals by the applicant depends on the time period (during which they are supplied) and will be subjected to tax as per the provisions of Not. No. 11/2017 - State Tax (Rate), issued in G.O.Ms No. 110, Revenue (CT-II) Department, Dt. 29-06-2017 amended from time to time.

Ruling

Q1. Whether the food supplied to hospital i.e. Government Hospitals, Private Hospitals and Autonomous Bodies on outsourcing basis the GST is chargeable? If GST is chargeable what is the tax rate?

Ans: Yes

Q2. If no GST is chargeable on the supply of food the GST already paid by the Hospitals and remitted to Government is recoverable from my future Bills.

Ans: For the period from 01.07.2017 to 26-07-2018 – 18% (CGST 9% + SGST 9%)

For the period from 27.07.2018 onwards – 5% (CGST 2.5% + SGST 5%). Provided that credit of input tax charged on goods and services used in supplying the service has not been taken.

  Read Full Case

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Author:

TaxReply


Aug 7, 2020


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