Various representations have been received by CBIC seeking clarification regarding applicability of GST on exemption of serving of food in schools under Mid-Day Meals Scheme if such supplies are funded by government grants and/or corporate donations. The issue was examined by GST Council in its 43rd meeting held on 28th May, 2021 and clarification is issued for the same on 17th June, 2021.
TEXT OF NOTIFICATION EXEMPTING MID-DAY MEAL
For proper appreciation of the issue the text of relevant Notification is reproduced hereunder:
Entry 66(b)(ii) of Notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017 exempts the following service:
“Services provided to an educational institution, by way of catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory”
The notification dated 28/06/2017 exempts all kinds of catering services including mid-day meal services sponsored by government.
The word ‘including’ used in the notification is of imperative importance, it is established rule of interpretation that by use of the word ‘including’ the intention of the legislature is clearly to make relevant factors wide and extensive and the interpretation must not be restricted to the specifically mentioned words/category. It is trite law that the use of the word including/ includes is only illustrative and not exhaustive. The rule has been upheld in various judgements, some of which are mentioned hereinbelow:
Delhi Develpoment Authority v. Bhola Nath Sharma Supreme Court of India Civil Appeal No. 10326-72 of 2010
South Gujarat Roofing Tiles Manufacturers association and Anr. v. State of Gujarat and Anr. Supreme Court of India Oct 20 1976
Additional Commissioner of Sales Tax, M.S., Bombay v. Afsons Industrial Corporation, reported in 1990 (78) S.T.C. 385
Thus, it is clear that the words “mid-day meal sponsored by government” preceded by the word ‘including’ is only illustrative and not exhaustive and hence mid-day meals not sponsored by the government also qualify for the exemption. The same view is also upheld by the CBIC vide Clarification No. 149/05/2021
CBIC vide Circular No. 149/05/2021 dated 17/06/2021 clarified that mid-day meal services are exempt form GST irrespective of its funding by the government grants or corporate donations.
CBIC further clarified that Aganwadi’s are also covered in the definition of educational institution and hence any catering or mid-day meal services provided to Aganwadi’s are also exempt.
1. Mid-day meals provided to educational institute sponsored by government grants are exempt
2. Mid-day meals provided to educational institute sponsored by corporate donations are exempt
3. Mid-day meals provided to educational institute NOT sponsored by government grants or corporate donations are exempt
4. Aganwadi’s are also covered in the definition of educational institution.
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