GST Rate for Industrial Canteen Services: Gujarat Advance Ruling
The Gujarat Authority for Advance Ruling decided that industrial canteen services provided by contractors are classified as outdoor catering, attracting 18% GST.
- Ruling
- GUJ/GAAR/R/2018/8 dated 21.3.2018
- Dated
- 21 Mar 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
- Rashmi Hospitality Services asked if their canteen services were taxed at 12% or 18%.
- The Authority classified the work as outdoor catering services.
- Outdoor catering services are subject to an 18% GST rate.
- The identity of the employees eating the food does not change the tax rate.
In short
The company asked the Gujarat Authority for Advance Ruling (GAAR) to clarify the Goods and Services Tax (GST) rate for running an industrial canteen. They wanted to know if they should charge 12% or 18% for their catering services. The authority decided that because the service is provided at the client's factory rather than the caterer's own premises, it counts as outdoor catering.
What has changed
How it worked before
Businesses were often unsure if industrial canteen services should be taxed at the lower rates typically reserved for institutional mess facilities or restaurants.
What has changed
The authority ruled that these services are outdoor catering, which carries an 18% GST rate. This means businesses cannot claim the lower rates meant for simple canteen or mess operations.
Who this affects
Catering companies that operate in-house canteens for manufacturing factories or other corporate clients.
An example
Imagine a catering firm, 'Tasty Meals Pvt Ltd', that runs a canteen inside a car manufacturing plant. They might wonder if they can charge a lower tax rate because they serve factory workers. Based on this ruling, they should expect that their service is classified as outdoor catering and must charge 18% GST.
What you should do
If you provide similar services, you should review your tax classification. Remember that an advance ruling only legally binds the company that asked for it and their specific tax office; it is not a law that automatically applies to your business.
If you do nothing
If you charge a lower rate based on this ruling but your local tax officer disagrees, you may face a demand for the unpaid tax difference. You could also be liable for interest and penalties for underpaying your GST. Never assume a ruling for another company protects you from your own tax assessment.
The terms explained
- Outdoor catering
- A service where food or drink is prepared and served at a location chosen by the client, rather than at the caterer's own restaurant or premises.
- Advance ruling
- A formal decision from tax authorities on how GST laws apply to a specific business situation.
- Input tax credit
- The tax a business pays on its own purchases, which it can use to reduce the tax it owes on its sales.
The ruling in detail
Authority for Advance Ruling
M/s. Rashmi Hospitality Services Private Limited
GUJ/GAAR/R/2018/8 dated 21.3.2018 · Gujarat
Questions before the authority
- Whether the rate of tax on their supplies made to the recipient would be 12% or 18%.
Facts
The applicant provides catering services to manufacturing industries by running in-house canteens at their factories. The applicant sought an advance ruling on the applicable GST rate, specifically whether their services should be classified as outdoor catering or canteen services, following a request from a client to charge a lower rate.
Ruling
| Question | What the authority ruled |
|---|---|
| Applicable GST rate for catering services provided to a client's factory canteen | 18% (CGST 9% + SGST 9%) Covered under Sr. 7(v) of Notification No. 11/2017-Central Tax (Rate) and corresponding State Tax notification |
The Authority ruled that the services provided by the applicant constitute outdoor catering services. Consequently, the supply of services is subject to GST at the rate of 18%.
Reasoning
The Authority determined that the applicant is providing services to the recipient (the company) rather than directly to the employees, and the service is provided at a place other than the applicant's own premises. Relying on the definition of outdoor catering and judicial precedent from the erstwhile Service Tax regime, the Authority concluded that the activity falls under **outdoor catering services**. It explicitly rejected the applicability of the circular regarding college hostel mess fees, noting that the nature of the service is not that of a restaurant or canteen as contemplated by the lower tax rate provisions.
Provisions relied on
- Section 97(2)(e) of the CGST/GGST Act, 2017
- Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017
- Notification No. 11/2017-State Tax (Rate) dated 30.06.2017
For the practitioner
This ruling clarifies that industrial canteen services provided by an outside contractor are classified as **outdoor catering services** rather than restaurant/canteen services. It settles that the identity of the ultimate consumer (employees) does not alter the nature of the service provided to the corporate client. Practitioners should note that this decision mandates an **18% GST rate** for such arrangements, effectively precluding the lower 5% rate applicable to institutional mess facilities.
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/guj-2018-8_dt_21-03-18_rashmi_hospitality.pdf
Legibility of the scan, as read: high.
Prepared 15-10-2026.
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