CBIC withdraws Circular clarifying 5% GST on Catering Services to Railways

NEW DELHI: The Central Board of Indirect Taxes and Customs (CBIC) has withdrawn its circular clarifying levy of five percent Goods and Services Tax ( GST ) on the catering services provided in Indian railways.

Earlier, the Board had issued an order clarifying that 5% Uniform rate of Goods and Services Tax applies to all railway catering services in trains or on stations.

In January, it was also clarified that the supply of food or drink provided by a mess or canteen is taxable at 5% without Input Tax Credit under the current Goods and Services Tax regime.

However, a few rulings by the Advance Ruling Authority of the different States had took a different view and held that a higher tax rate of 18 percent is applicable to such services.

However, the last meeting of the GST Council held on last week had cleared the ambiguity on the tax rates applicable on these services and decided to rationalize entry relating to the composite supply of food and drinks in the restaurant, mess, canteen, eating joints and such supplies to institutions (educational, office, factory, hospital) on contractual basis at GST rate of 5%.

The Council made it clear that the scope of outdoor catering under 7(v) is restricted to supplies in case of outdoor/indoor functions that are event-based and occasional in nature.

Accordingly, a notification in connection with the same had been issued by the board. “Hence, Circular No. 28/02/2018-GST, dated 08.01.2018 as amended vide Corrigendum dated 18.01.2018 and Order No 02/2018-Central Tax dated 31.03.2018 is withdrawn w.e.f 27.07.2018. Difficulty if any, in the implementation of this Circular may be brought to the notice of the Board,” the CBIC said.

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