There is a doubt raise by two self-contradictory notifications which are Notification No. 11/2017-Central Tax (Rate) and Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 Sl. No 66. This doubt is regarding the GST on Supply of Food & Beverage service by the Educational Institution to its students and the same is clarified in the current circular. A doubt comes that whether supply of food and beverages services by educational institution is exempt from under GST or not.
There are continues amendments in the GST law. Further, to clarify different situations, the Government comes up with the clarification every now and then.
The Central Board of Indirect Tax and Customs aka CBIC issued a clarification, to fix up the contraction, through issuing circular no. 85/04/2019-GST dated 1st January 2019. Here is the clarification regards to applicability of rate of GST on supply of beverage & food services by educational institutions.
The Notification No. 11/2017 CT-(R) dated 28 July 2017 states that the supply of foods and beverages made by institute such as college, school and hospital etc. will be responsible to pay 5% rate of GST.
The matter has been examined Notification No. 11/2017-Central Tax (Rate), Sl. No. 7(i) describes GST rate of 5% on supply of food & beverages services. This notification states about only rates of services but not states about applicability or non-applicability of GST on services. Explanation 1 to the said entry [entry No. 7(i)] mentioned that such supply can take place at canteen, mess, cafeteria of an institution such as school, college, hospitals etc.
While Notification No. 12/2017 CT-(R) dated 28 July 2017 availed an exemption for the service provided by the educational institute to its student, faculty, & staff.
It is inherent that the entry particularly covered under Notification 12/2017- CT(R) is exempt from GST although GST rate for the same has been prescribed vide different Notification. Supply of all service by educational institute to their student, faculty & staff will be exempt from GST.
There is no conflict between the two entries. Entries in Notification No. 11/2017-Central Tax (Rate) describing GST rates on service need to be read together with entries in exemption Notification No. 12/2017-Central Tax (Rate). A supply which is particularly covered by any entry of above Notification which is No. 12/2017-Central Tax (Rate) get exemption from GST overruling the fact that the rate of GST has been prescribed for the same Notification No. 11/2017-Central Tax (Rate). To overcome from the doubts on the issue, Explanation 1 of Entry 7(i) of Notification No. 11/2017-Central Tax (Rate) has been amended to delete the words “school, college” prescribed in it. Then the heading 9963 has been added in Column (2) against entry at Sl. No. 66 of Notification No. 12/2017-Central Tax (Rate).