GST Rate for Industrial Canteen and Contract Food Services
The Tamil Nadu Authority for Advance Ruling clarified that ongoing industrial food supply services attract 18% GST, not outdoor catering rates.
- Ruling
- Advance Ruling No.113/AAR/2023 Dated:17.11.2023
- 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
- Jothi Catering Services asked for the correct GST rate on industrial food supply.
- The authority ruled the service is not 'outdoor catering' as it lacks event-based nature.
- The activity is classified as 'other contract food services' under SAC 996337.
- The service is subject to an 18% GST rate.
In short
The company asked the Tamil Nadu Authority for Advance Ruling (AAR) to clarify the GST rate for providing food to industrial workers under a long-term contract. The core issue was whether this service qualifies as 'outdoor catering'—which often carries a lower tax rate—or as a general food service.
What has changed
How it worked before
Many businesses assumed that any service involving the supply of prepared food to a client's premises could be classified as outdoor catering to benefit from lower tax rates.
What has changed
The authority decided that because the service is ongoing and not tied to a specific event, it does not meet the definition of outdoor catering. It falls under the residual category for contract food services, meaning businesses must now apply the standard 18% GST rate instead of lower concessional rates.
Who this affects
Catering businesses that provide food to industrial canteens or offices under long-term contracts.
An example
A canteen operator, 'Daily Meals Pvt Ltd', provides daily lunch to a factory's employees under a yearly contract. They might wonder if they can charge a lower GST rate by calling it outdoor catering. Based on this ruling, they should expect to charge 18% GST because their service is a continuous contract, not an event-based catering service.
What you should do
Review your current GST classification for industrial food supply contracts. Remember that an Advance Ruling is only binding on the business that requested it and its specific tax officer; it is not a general law that automatically applies to your business.
If you do nothing
If you apply a lower tax rate based on this ruling without having your own, a tax officer may view it as a short payment of tax. You could face demands for the unpaid tax, along with interest and penalties for incorrect classification.
The terms explained
- SAC 996337
- A specific service accounting code used by the government to classify 'other contract food services' that do not fit into standard restaurant or catering categories.
- Residual entry
- A catch-all category in the tax law used for services that do not fit into any of the more specific, lower-taxed definitions.
- Outdoor catering
- A service defined by tax authorities as being event-based or occasional, rather than a permanent or long-term supply of food.
The ruling in detail
Authority for Advance Ruling
M/s Jothi Catering Services
Advance Ruling No.113/AAR/2023 Dated:17.11.2023 · Tamil Nadu
Questions before the authority
- Rate of Tax for Outdoor Catering Services With ITC
- HSN code
- Latest Notification
Facts
The applicant is engaged in providing food and beverage services to workers of large industries under a contract. They deliver prepared food to the client's premises but are not involved in the distribution of food within those premises. The applicant sought clarification on the applicable HSN code and GST rate for this specific business model.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification and Rate | SAC 996337, 18% GST Classified as other contract food services |
The Authority ruled that the applicant's activity does not qualify as 'outdoor catering' as it is not event-based or occasional in nature. Instead, the service is classified as 'other contract food services' under SAC 996337. Consequently, the activity attracts 18% GST.
Reasoning
The Authority determined that the service falls under SAC 996337, which covers food preparation and supply services based on contractual arrangements at industrial locations. It explicitly excluded the activity from the definition of 'outdoor catering' provided in Notification No.20/2019-CT(Rate), as the applicant's service is not event-based. Since the activity does not fit into the specific entries for restaurant or outdoor catering services, it falls under the **residual entry** for other food services. Therefore, the service attracts the standard rate of 18% GST.
Provisions relied on
- Section 97(2) of the CGST/TNGST Act, 2017
- Notification No.11/2017-CT(Rate) dated 28.06.2017
- Notification No.20/2019-CT(Rate) dated 30.09.2019
For the practitioner
This ruling clarifies that industrial canteen or contract food services provided on an ongoing basis do not qualify for the concessional rates applicable to 'outdoor catering'. Practitioners should note that such services are treated as **residual contract food services** subject to 18% GST. It serves as a warning that the nature of the contract, rather than the act of supplying food, determines the tax classification.
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/113_jothi_catering.pdf
Legibility of the scan, as read: high.
Prepared 13-10-2026.
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