The controversial service under PRE-GST regime carry the legacies to GST. In fact, the controversy travels to the outward supplies too under GST due to the definition of supply under GST.
The analysis captures the series of ruling till September 2018 on inward and outward supplies and its impact including in Auditor’s certificate 9C.
As outward supplies
Where the Appellate AFAR (AUTHORITY FOR ADVANCE RULING) upheld the taxability of the order of AFAR.
This ruling may scope out for a greater number of litigation files in the judicial forum. The serious impact is how the trade and the business community are equipped to meet out the contingency in terms of providing for in the books a direct hit in P&L and also legally. A concern for the auditor’s recommendation in form 9C
As inward supplies other than SEZ
Maharashtra ruling of 5 % conflicts the ruling of Gujarat and Tamil Nadu which is 18 %. Can it be taken a view the ruling of Maharashtra is not applicable to TN and vice versa. It remains to be seen how many such controversial ruling will be in pipe line from various states.
As inward supplies-SEZ
Outdoor caterer service is recognised as list of approved services by the commerce ministry and is exempted from IGST. Most of SEZ units were not availing this exemption even in Pre-GST as central excise and service tax department considered this service as canteen services and continue to take the same stand In post-GST also in spite of separate entry at Serial No. 7(v) of the rate notification No. 11/2017-CT (Rate) [as amended vide notification No. 46/2017-CT (Rate) dated 14.11.2017] which specifies that the services provided in the nature of ‘outdoor catering’ services are taxable at the rate of 18% (9%+9%).
Added to this many of the supplies to SEZ are classified under entry Sl.no 7(i) which attracts 5 % rate by taking stand as canteen services leaving space for dispute.
As inward supplies-Educational institutions
The application was dismissed as the same was withdrawn by the applicant. This is consequent to issue of notification 13/2018-Central Tax (Rate) dated 26th July 2018 substituting the sl.no 7(i) of Ntfn 11/2017 dt 28th June 2017 by including supply of food & beverages in educational institution.