GST on Supply of Food (India)

By | December 26, 2017
(Last Updated On: May 21, 2018)

GST on Supply of Food

Analysis of GST on Supply of Food

Is there any GST on Supply of Food ?

yes

“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 (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration is ‘supply of service” [ Para 6(b) of Schedule II of CGST Act. ]

Note  : As per Article 366(29A)(f) of Constitution of India,

A tax on the 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 (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, is ‘deemed sale of goods’. 

Constitution states that ‘supply’ is deemed sale of goods, while CGST Act states that it is ‘supply of service’

Commentary on GST on Supply of Food :-

  • Thus, any supply of food were some service is involved will be ‘supply of service
  • sale of tinned food items / Food items in Box or stored items is sale of goods as no ‘service’ element is involved.
  •  sale of packed food items or pre-prepared sweets or samosa/pakoda across the counter is not ‘supply of service‘. However when same item supplied in restaurant or eating joint is ‘supply of service’.

Outdoor catering services in canteen are taxable @ 18% GST: Gujarat AAR

What is the Rate of GST on Supply of Food ?

i) Rate of GST for supply of food in restaurant, eating joint, canteen

The rates of GST for supply, by way of or as part of any service of food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), in restaurant, eating joint, mess or canteen were as follows

GST rates as applicable upto 15-11-2017 :-

(aNot having air conditioning or heating in any part of establishment at any time during the year and not having licence or permit to serve alcoholic liquor for human consumption – 12% (CGST 6% and SGST 6%).

(bhaving liquor license or permit, whether or not having air conditioning or heating in any part of establishment at any time during the year 18% (CGST 9% and SGST 9%).

(chaving air conditioning or heating in any part of establishment at any time during the year whether or not having licence or permit to serve alcoholic liquor for human consumption – 18% (CGST 9% and SGST 9%).

[Refer Entry No 7 of Notification No 11/2017 Central Tax (Rate) Dated 28th June 2017 and Notification No 8/2017 Integrated Tax (Rate) Dated 28th June, 2017 effective from 1-7-2017 as existing upto 15-11-2017 ]

  GST rates w.e.f. 15-11-2017 are as follows :-

 (a) A stand-alone restaurant or restaurant or eating joints in hotels, guest houses, clubs meant for residential or lodging purposes with declared tariff less than Rs 7,500 per day – GST 5% [2.5% CGST plus 2.5% SGST/UTGST] Input Tax Credit of goods or services is not available. There is no option to avail Input Tax Credit and pay tax at full rate.

(b) A restaurant or eating joints in hotels, guest houses, clubs meant for residential or lodging purposes with declared tariff Rs 7,500 or more per day – GST 18% [9% CGST plus 9% SGST/UTGST ] . Input Tax Credit of goods and services is available.

[ Refer Notification No 11/2017 Central Tax (Rate) Dated 28th June 2017 and Notification No 8/2017 Integrated Tax (Rate) Dated 28th June, 2017 amended by Notification No 46/2017 Central Tax ( Rate) / Notification No 48/2017 Integrated Tax(rate) Dated 14.11.2017]

ii) Rate of GST for supply of food as outdoor catering 

GST rate  is 18% (CGST 9% and SGST 9%) /IGST Rate 18% w.e.f. 1-7-2017  on the following :-

Supply, by way of or as part of any service or in any other manner whatsoever in outdoor catering wherein goods, being food or any other article for human consumption or any drink (whether or not alcoholic liquor for human consumption), as a part of such outdoor catering and such supply or service is for cash, deferred payment or other valuable consideration.

Note : Meaning of ‘outdoor catering – The term is not defined in CGST Act

[Refer Entry No 7(v) of Notification No 11/2017 Central Tax (Rate) Dated 28th June 2017 and Notification No 8/2017 Integrated Tax (Rate) Dated 28th June, 2017, effective from 1-7-2017 ]

iii) Rate of GST for supply of food in canteen

Supply of food to workman at a price is a ‘sale’ and is taxable

 [TVS   Motors Co. Ltd. V. State of Karnataka (Karnataka High Court): STA NOS. 49 OF 2011 & 26-28 OF 2012 ]

GST rate  is 18% (CGST 9% and SGST 9%) /IGST Rate 18% w.e.f. 1-7-2017

Issue : GST is to be charged on Open market Value or Cost recovered from Employees  ?

[Refer Entry No 7(ix) of Notification No 11/2017 Central Tax (Rate) Dated 28th June 2017 and Notification No 8/2017 Integrated Tax (Rate) Dated 28th June, 2017, effective from 1-7-2017  ]

What is the Rate of GST on Supply of cold drinks ?

The GST on cold drinks (aerated water) is 40% [14% CGST plus 14% SGST + 12% GST Compensation Cess].

However, if it is sold in restaurant as part of service, the it is a composite service and GST rate should be 18% (if AC restaurant) or 12% (if Non AC restaurant). This is confirmed in FAQ No. 6 of FAQ on Food Processing issued by Directorate General of Taxpayer Services on 31-7-2017.

Now w.e.f. 15-11-2017 the rate will be 5% (2.5% CGST plus 2.5% SGST/UTGST)

What is the Rate of GST on foods sold at counter /  takeaway ?

All stand-alone restaurants irrespective of air conditioned or otherwise, will attract 5% GST without ITC . Food parcels (or takeaways) will attract 5% GST without ITC w.e.f. 15-11-2017

[ GST on Services : Changes by 23rd GST Council Meeting  on 10.11.2017]

How to issue invoice if Sale of liquor and food from same premises ?

Sale of liquor and food from same premises

Separate invoice should be made for sale of liquor (as per State law) and supply of food (as per GST Law). They cannot opt for composition scheme as supplying non-taxable goods (liquor)

[ FAQ No. 10(ii) and 10(vi) of FAQ on Food Processing issued by Directorate General of Taxpayer Services on 31-7-2017.

What if Food supplied to weaker section of society ?

There is Exemption from GST to the following Services :

Food preparations put up in unit containers and intended for free distribution to economically weaker sections of the society under a programme duly approved by the Central Government or any State Government. :

Condition : When the supplier of such food preparations produces a certificate from an officer not below the rank of the Deputy Secretary to the Government of India or the Deputy Secretary to the State Government or the Deputy Secretary in the Union Territory concerned to the effect that such food preparations have been distributed free to the economically weaker sections of the society under a programme duly approved by the Central Government or the State Government concerned, within a period of five months from the date of supply of such goods or within such further period as the jurisdictional commissioner of the Central tax or jurisdictional commissioner of the State tax, or jurisdictional officer of the Union Territory Tax as the case maybe, may allow in this regard.

[ NOTIFICATION NO.39/2017-CENTRAL TAX (RATE),/ NOTIFICATION NO.40/2017- INTEGRATED  TAX (RATE), DATED 18-10-2017  ]

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