The Telangana State Authority of Advance Ruling (AAR) ruled that 5% GST is applicable on food supplied to hospitals including private hospitals, government hospitals, and autonomous bodies on outsourcing basis, with the condition that Input Tax Credit (ITC) cannot be availed.
The Applicant, Mr Navneeth Kumar Talla, deals with the supply of food to M/s MNG Cancer Hospital Hyderabad an Autonomous Body on an outsourcing contract basis to patients of M/s MNG Cancer Hospital.
The applicant (caterer) has sought the advance ruling on the issue of whether food supplied to hospitals, i.e. private hospitals, government hospitals and autonomous bodies on outsourcing basis, is chargeable or not.
The applicant also needed clarification that if GST is chargeable, what is the GST rate and if no tax is chargeable on the supply of food, can the hospitals recover GST already paid from their future bills?
The Authority consists of the Joint Commissioner of Central Tax, B. Raghukiran and Addl. Commissioner of State Tax, J. Laxminarayana ruled that 5% GST is chargeable on food supplied to the hospital, i.e. private hospitals, government hospitals and autonomous bodies on outsourcing basis.
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The AAR after analysing all the respective amendment notifications ruled that the food supplied to hospitals on outsourcing basis falls under ‘supply of restaurant service other than at specified premises’ of notification no 20/2019 where 5% GST is applicable, and ITC can not be taken.
It also said that the above issue would be subjected to tax as per the notification no. 11/2017 – State Tax (Rate), issued by the Revenue (CT-II) Department, Dated. 29-06-2017 which was amended from time to time.
The Authority further ruled that for the period from 01 July 2017, to 26 July 2018, 18% of GST must be paid. Also, for the period from 27 July 2018, onwards 5% of GST must be paid, provided that ITC charged on goods and services used in supplying the service has not been taken.
For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@cleartax.in
DVSR Anjaneyulu known as AJ, is a Chartered Accountant by profession. Loves to listening to music & spending time with family and friends.
