Supply of Foods / catering services to the hospital canteen is taxable Service and not eligible for exemption: West Bengal AAR
Summary: The West Bengal Authority for Advance Rulings (AAR) has clarified that the supply of food to hospital canteens by third-party catering services is taxable under GST and does not qualify as an exempt composite supply of healthcare services. The case involved Bamapada Jana, who provided catering services to the Central Hospital, Kolkata, under a specific contract. The applicant prepared and delivered food to in-patients based on medical recommendations, as stipulated in the agreement with the hospital. The hospital itself, being a clinical establishment, provides healthcare services exempt from GST. However, as the food supply was outsourced to a third party, it did not form part of the hospital’s composite healthcare services. The AAR ruled that the applicant’s service constituted a standalone catering service subject to GST, and thus, invoices could not be raised as exempt under Notification No. 12/2017. This distinction highlights that catering services provided to hospitals do not inherently qualify for healthcare-related exemptions under GST laws.
In re Bamapada Jana (GST AAR West Bangal), Ruling No. 14/WBAAR/2024-25, 26/11/2024
In recent case of Bamapada Jana- Karnata West Bengal AAR held that, food is supplied by a separate person under (catering service) contract made by the hospital. Therefore, the scope of the applicant is limited in preparing food and supplies the same to hospital, for which the Central Hospital is liable to pay the consideration to the applicant. Hence same cannot be considered as composite supply as Heathcare service and hence taxable under GST.
Fact of the case:- The applicant is a service provider and engaged in providing catering services to the hospital canteen. The applicant supplies food for patient diet made to the Central Hospital of Kolkata, and raised the following questions to AAR.
1. Whether the supply of food to all the inpatients would be considered as exempted supply under Notification No. 12/2017 read with Sec. 8(a) of the GST Act?
2. Whether the applicant is correctly raising invoices by considering the services provided to the Central Hospital, South Eastern Railway, Garden Reach Road, Kolkata 700043 falling under the SAC 999311 which is exempted as per entry Notification 12/2017 Central Tax (Rate) dated 28.06.2017?
AAR Findings and conclusion: – the applicant is providing , kitchen and dietary service related contract was placed by the Central Hospital. Under which applicant undertakes preparation, processing and cooking of meals, special diets and feeds as per specification and deliver to inpatients as per time specified by the Hospital.
Though, the Central Hospital is a clinical establishment and it provides health care services to both in-patients as well as out-patients. supply of food provided by the hospital, as a part of composite supply of health care services, is not taxable separately as it has been clarified in the Circular No. 32/06/2018 GST on 12.02.2018. However, in the instant case, the hospital provides such food to the in-patients in an outsourced manner i.e., food is supplied by a separate person according to the contract made by the hospital. Therefore, the scope of the applicant is limited in preparing food and supplies the same to the in-patients only.
The applicant, according to scope of service, is entrusted with the job of preparing and providing meals to in-patients of the hospital. Food is cooked as per recommendation of the medical practitioners of the hospital and served accordingly to the in-patients. The scope of service in point 2.02 of the contract agreement affirms that the nature of job of the applicant lies with only catering services by serving nearest to one of the standard diets as per recommendation of medical officers of hospital.
Therefore, food supplied to the in-patients as advised by the doctor/nutritionists constitutes a part of composite supply of health care services in the hand of the Central Hospital itself. Supply made by the applicant to the Central Hospital is a standalone service of supply of food and in no way can be considered as a composite supply of health care services.
Ruling by AAR
Question: Whether the supply of food to all the inpatients would be considered as exempted supply under Notification No. 12/2017 read with Sec. 8(a) of the GST Act?
Answer: No. Supply of food by the applicant to all in-patients would not be covered under entry No 74 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 to be an exempted supply.
Question: Whether the applicant is correctly raising invoices by considering the services provided to the Central Hospital, South Eastern Railway, Garden Reach Road, Kolkata 700043 falling under the SAC 999311 which is exempted as per entry Notification 12/2017 Central Tax (Rate) dated 28.06.2017?
Answer: No. Tax is payable by the applicant on his supply made to Central Hospital, South Eastern Railway.
Author Bio
