Table of Content
Due to the two conflicting notifications, doubt was raised with regard to the taxability of supply of food and drinks by an education institution to its students and the same is clarified in the current circular.
The outcome of entire clarification is tabulated here under for easy understanding
|Foods and beverages supplied by an educational institution to its students, faculty and staff||Exempt under GST vide sr. no. 66 of notification no. 12/2017- Central Tax (Rate) dated 28th June, 2017|
|Food and beverages supplied by any person other than educational institution based on a contractual agreement with such institution.||GST payable @5%|
|Foods and beverages supplied by an institution (other than educational institution) to its students, faculty and staff||GST payable @5%|
Taxability as per notification no. 11/2017 – central tax (rate) dated 28th June, 2017
- Explanation 1 provided under sr. no. 7 of notification no. 11/2017 covers supply at a canteen, mess, cafeteria or dining space of an institution such as a school, college, by such institution or by any other person based on a contractual arrangement with such institution for such supply.
- Thus as per sr. no. 7 foods and beverages served by an institution is chargeable to GST @5% (2.5% CGST and 2.5% SGST).
Exemption available at notification no. 12/2017 – central tax (rate) dated 28th June, 2017
- Sr. No. 66 of notification no. 12/2017 provides exemption from GST to an educational institution.
- As per the said serial number, all the services provided by an educational institution to its students, faculty and staff is exempt from GST.
- Above exemption obviously includes the foods and beverages being served by an education institution.
- Clarification by the board on above conflicting situation and subsequent steps thereon
- The Central Board of Indirect Tax and Customs, vide circular no. 85/04/2019-GST dated 1st January, 2019, has clarified that notification no. 11/2017-Central Tax (Rate) prescribes the GST rates on services and the same have to be read together with entries in exemption notification no. 12/2017-Central Tax (Rate) dated 28th June, 2017.
- It has further been clarified by the board, that the supply which is specifically covered by any entry of notification no. 12/2017-Central Tax (Rate) dated 28th June, 2017 is exempt from GST notwithstanding the fact that GST rate has been prescribed for the same under notification no. 11/2017-Central Tax (Rate) dated 28th June, 2017