In re M/s Rashmi Hospitality Services Private Limited (GST AAR Karnataka)
Whether the subsidy received from the state government would form part of consideration under section 2(31) of the CGST Act?
The subsidy amount received from the Government of Karnataka for the supply of service of food to the ultimate beneficiaries (consumers) in Indira Canteens by the applicant is excluded from the definition of consideration and would not form the part of the turnover on which tax is liable. The consideration collected from the beneficiaries is liable to tax after deducting the tax fraction as the price collected is inclusive of tax.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, KARNATAKA
1. M/s Rashmi Hospitality Services Private Limited, having GSTIN number 29AACCR5234Q2ZR, have filed an application for Advance Ruling under Section 97 of the CGST Act, 2017 & KGST Act 2017 read with Rule 104 of the CGST Rules, 2017 and KGST Rules 2017, in FORM GST ARA-01 discharging the fee of Rs. 5,000/- each under the CGST Act and the KGST Act.
2. The Applicant is a Partnership firm and is registered under the Goods and Serices Act, 2017. The applicant has sought advance ruling in respect of the following question:
Whether the subsidy received from the state government would form part of consideration under section 2(31) of the CGST Act?
3. The applicant furnishes some facts relevant to the stated activity:
a. The applicant states that the firm is engaged in the business of supply of food and beverages. Meanwhile the applicant has entered into a contract with Government of Karnataka for supplying food (breakfast, lunch and dinner) in the premises under the name and style of “Indira Canteen” in various districts located in the state of Karnataka.
b. The applicant firm states that the main theme of the Indira canteen launched by the scheme of Government of Karnataka is to provide breakfast, lunch, dinner at low cost subsidized price to the public The said canteens were run by the Bruhat Bengaluru Mahangara Palike in Bengaluru City where as in the outside districts the canteens were run by local Municipal Corporations who shall provide designated infrastructure designed for such canteens. The applicant has been awarded the contract of supply of food in four districts of Karnataka viz. Tumakuru, Belagavi, Davanagere and Mysore districts.
c. The applicant shall supply meals as per the tetius of the contract wherein the number of meals is fixed. Essentially such scheme being only to provide low cost subsidized food to the local people, the applicant receives subsidy from the Government in addition to the contracted price from the beneficiaries towards the supply of meals in the following manner:
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