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Supply of food or drink under cash & carry model is taxable @ 5%

Recently AAR gave an important ruling dated  12th September 2019, regarding the applicability of GST on the supply of goods being food or any other article for human consumption or any drink provided by applicant under cash and carry model  in a case of Elior India Catering LLP, [2019] 110 taxmann.com 187 (AAR - KARNATAKA) which is discussed as below:

Facts of the case
  • The Applicant is engaged in the business of providing outdoor catering services. The Applicant has entered into an agreement with CBRE South Asia Private Limited (‘CBRE’) whereby it has been decided that the Applicant will provide catering support services at the premises of CISCO Systems India Private Limited (‘CISCO’).
  • Basis the said agreement, the Applicant prepares food items at the premises of CISCO and serves food to the employees working on specific shifts, wherein the Applicant receives consideration directly from CISCO on monthly basis. Further, under the Cash and Carry model, the Applicant serves food to employees of CISCO over the counter, and consideration towards the same is received from the respective employees who place the order. 
 Issue Involved
  • Whether services rendered by applicant under cash and carry model are in the nature of ‘services provided by canteen’ or ‘outdoor catering services’?
  • If the services rendered by applicant under cash and carry model are classifiable as ‘services provided by canteen’, Whether, GST chargeable at the rate of 5%?
Ruling/Observation
  • Since the employee is the person who pays the consideration, he becomes the recipient of the service and the service is rendered by the applicant to the employee. The recipient is not bound to purchase the items and only on his decision to purchase the food items available for sale, the contract of supply is entered and the consideration is as shown in the menu card. Hence, it is a contract of supply between the applicant and the employee;
  • Applicant is preparing the food on site and supplying the same on the premises for consumption of employees on cash and carry model. Applicant would qualify as an eating joint and also such supply is not an event based supply. Thereby it will be covered under entry of ‘services provided by a canteen’.
  • Thereby applicant under cash and carry model is taxable at 5% GST.
Please click here for Ruling.

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