Food Services Provided to the employees can be called as Canteen services?

Food Services Provided to the employees can be called as Canteen services?


Food Services Provided to the employees can be called as Canteen services?

(M/s Goodwill Industrial Canteen-AAR)


Facts of the case:

  • The Applicant has stated to render catering services to various companies. They prepare food in their place and supply to the employees of their clients/companies.
  • The said companies provide them the rent free space to distribute the food to the employees of the companies. They purchase materials and use their own manpower in cooking and distributing food.
  • They submitted that it is a catering service and eligible for 5l.No. 7(i) of Notification No. LL/77 as amended.
  • The applicant has sought advance ruling to know the applicable percentage of GST to their business.


  • The Applicant submitted, that they enter into contracts with companies on whose rent free premises where food is supplied, no payment is taken from employees of the company.
  • As per the contract entered by the Applicant with the client, the premises for services to be provided for canteen has been made available to the Applicant by the client along with required furniture, fittings, cooking and catering utensils, and crockery and cutlery items apart from providing water, electricity and fuel.
  • The Applicant has to purchase the required provisions, vegetables, etc. prepare food stuff as per the menu given by the Management using the Applicant’s manpower. This will be served to the employees, by collecting coupons on behalf of the client. Based on the coupons collected, the Applicant will give a bill and payment will be made by the company to the Applicant on monthly basis.
  • In short, it is deciphered that the Applicant is vested with management of the canteen facilities. The Applicant himself does not get paid for by the consumers of the food and beverages. The Recipient of the services are the companies who enter into contract with the applicant. Supply of food is classified under 9963
  • The amendment is based on the decision of the GST Council, in its 23rd meeting held on 10th November 2O17 which is given supra. From the discussions, it is evident that the intention of having tax rate of 5% as in 7(i) is only in respect of supply of foods in Standalone restaurants and other similar eating joints and that in Hotels wherein the dectared tariff of any unit of accommodation is less than Seven thousand Five hundred only. That is it is applicable in cases where the consumers who purchase the food & beverages, do so on the premises of the supplier of such food & beverages and directly pay to such supplier.
  • From the contract furnished, it is seen that the applicant prepares the food using his own labour on the premises of the companies, who is the recipient of the service, and serve the food to consumers who don’t make payment for to the applicant. The applicant is paid only by the company. The above GST Council discussions and decisions also clearly differentiate a restaurant/ canteen / mess run independently and the services extended by the applicant which fall under the category of outdoor catering. The very likely scenario of ‘Outdoor Caterer/ trying to call himself as a ‘restaurant’ has been discussed and the decision to lower the tax rate only to restaurants has been taken by the council.
  • The services of the applicant of supplying food and beverages on the premises of industrial unit/office, which are on the terms of the contract with M/s Kone Elevators and such other contracts, are liable to tax @18% for the period upto 26.07.2018 and from 27.07.2018 onwards according to above GST council meeting it would be 5%