Corporate Canteen Services Attract 5 Percent GST Without Tax Credit
Corporate catering inside client cafeterias is classified as canteen service taxable at 5% GST without input tax credit.
- Ruling
- NO.GST-ARA- 05/2018-19/B- 61 Mumbai, dt. 09.07.2018
- Dated
- 09 Jul 2018
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Caterer asked if corporate food supply is canteen service or outdoor catering.
- Authority ruled daily corporate cafeteria food supply counts as canteen service.
- Services attract 5% GST under both B2B and B2C billing models.
- Businesses providing these canteen services cannot claim input tax credit.
In short
A catering provider asked whether supplying daily food to corporate employees in client canteens is treated as canteen services or outdoor catering under Goods and Services Tax (GST). The question covered both direct payments from employees and bulk payments by the employer.
What has changed
How it worked before
Before this ruling, many corporate caterers were unclear whether daily office cafeteria services qualified as outdoor catering or standard canteen services.
What has changed
The Maharashtra Authority for Advance Ruling (AAR) in order GST-ARA-05/2018-19/B-61 decided that regular catering in client cafeterias is a canteen service under Entry 7(i) of Notification No. 11/2017-Central Tax (Rate). This means the service attracts 5% GST without input tax credit (ITC). The authority clarified that outdoor catering rules apply only to occasional or event-based catering, not continuous daily office food supply.
Who this affects
Commercial caterers and food vendors supplying daily meals or operating canteens inside corporate offices or industrial factories.
An example
A catering company contracts with an IT firm to manage its staff cafeteria, preparing meals daily. The caterer asks whether to charge GST as an outdoor caterer or as a canteen service provider. Based on Maharashtra AAR order GST-ARA-05/2018-19/B-61, this regular supply qualifies as a canteen service, meaning 5% GST applies without input tax credit.
What you should do
Review your GST tax structure if you run corporate canteens to ensure you charge 5% GST without claiming input tax credit. Remember that an advance ruling binds only the business that applied for it and its specific tax officer, so you cannot treat this as automatic law for your business.
If you do nothing
If you incorrectly classify continuous office cafeteria services as outdoor catering and claim input tax credit, your tax officer may reject those credits. You could be liable to pay back the credit along with interest and penalties.
The terms explained
- Input Tax Credit
- A tax credit that allows businesses to reduce the GST they pay on sales by the amount of GST they have already paid on purchases.
- Outdoor Catering
- Catering services provided for specific events or occasions at locations chosen by the client, such as exhibition or wedding halls.
- Advance Ruling
- A decision given by tax authorities to a specific applicant clarifying how GST rules apply to their transaction.
The ruling in detail
Authority for Advance Ruling
ISMAIL AHAMAD SOOFI
NO.GST-ARA- 05/2018-19/B- 61 Mumbai, dt. 09.07.2018 · Maharashtra
Questions before the authority
- Whether the catering services provided by the Applicant under B2B Model and B2C Model are to be classified as canteen/restaurant services under Entry. No. 7(i) of the Notification No. 11/2017 dated 28th June 2017 as amended by the Notification No. 46/2017- Central Tax (Rate) dated 14th November 2017 or as outdoor catering services under Entry. No 7(v) of the said Notification?
Facts
The applicant supplies catering and canteen services to corporate and industrial clients under Business-to-Consumer (B2C) and Business-to-Business (B2B) models. Food and beverages are prepared either in kitchens located on the clients' premises or at a centralized kitchen outside, and served to employees in cafeterias on client premises. Under the B2C model, payment is received directly from employees, whereas under the B2B model, consideration is paid directly by the corporate clients.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification of B2B and B2C catering services in corporate canteens | Sr. No. 7(i) of Notification No. 11/2017-Central Tax (Rate) as amended Classified as canteen services taxable at 5% GST without ITC w.e.f. 14.11.2017 |
The Authority for Advance Ruling held that catering services provided by the applicant under both B2B and B2C models constitute **canteen services**. Following the amendment via Notification No. 46/2017-Central Tax (Rate), the services fall under **Sr. No. 7(i)** of Notification No. 11/2017-Central Tax (Rate), taxable at 5% GST without input tax credit.
Reasoning
The authority observed that canteen services involve supplying food and beverages to employees within designated cafeteria premises of client organizations. It noted that outdoor catering under Entry 7(v) was restricted by Notification No. 13/2018-Central Tax (Rate) to event-based or occasional catering at locations like exhibition halls and marriage halls. Because the applicant provides continuous catering in client canteens, it does not constitute outdoor catering. Following Notification No. 46/2017-Central Tax (Rate), air-conditioning distinctions were removed, placing canteen services under Entry 7(i) at a 5% GST rate without input tax credit.
Provisions relied on
- Schedule II Clause 6(b) of CGST Act, 2017
- Entry 7(i) of Notification No. 11/2017-Central Tax (Rate)
- Entry 7(iv) of Notification No. 11/2017-Central Tax (Rate)
- Entry 7(v) of Notification No. 11/2017-Central Tax (Rate)
- Notification No. 46/2017-Central Tax (Rate)
- Notification No. 13/2018-Central Tax (Rate)
- Circular No. 28/02/2018-GST
For the practitioner
This ruling establishes that regular catering services provided to corporate employees inside client premises qualify as **canteen services** under Entry 7(i) rather than outdoor catering. It confirms that post-14.11.2017, such services attract **5% GST without ITC**, regardless of whether consideration is collected directly from employees or the employer.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/maha-gst-ara-05-b-61_dt.09.07.18_ismail_ahamad_soofi.pdf
Legibility of the scan, as read: high.
Prepared 20-10-2026.
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