XYZ Ltd giving contract to a person Ram for setup a mess in factory and paid Rs
100 per Plate for 2000 employee in factory. Company provides free meals to their
employees. Mr Ram raised invoice to XYZ Ltd. for mess Charges of Rs 200000 and
Charged GST @ 18% RS 36000.
(i) Is Input of IGST Rs 36000 available to XYZ Ltd?
(ii) As Section 17(5) of CGST Act disallowed ITC on only Outdoor catering. As per our view the catering service provided in this example is Indoor catering service.
Whether on the basis of this Input on indoor catering services are allowed.
(i) Section 17(5)(I) blocks the credit on “food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply.
Thus on the basis of above credit on IGST of Rs.36000 on catering services is not available.
(ii) The definition of outdoor caterer is not available in GST Law. But as per definition in service tax as “Outdoor caterer” means a caterer engaged in providing services in connection with catering at a place other than his own but including a place provided by way of tenancy or otherwise by the person receiving such services”
So the catering service in your factory when provided by outsider is outdoor catering and credit is not allowed on it.