Central Tax Circulars

CGST Circular 85/2019

To,

The Principal Chief Commissioners/ Chief Commissioners/ Principal
Commissioners/ Commissioner of Central Tax (All) /The Principal Director
Generals/ Director Generals (All)

Madam/Sir,

Subject: Clarification on GST rate applicable on supply of food and
beverage services by educational institution- reg.

1) Representations have been received seeking clarification as to the rate
of GST
applicable on supply of food and beverages services by educational
institution to its students. It has been stated that the words “school,
college” appearing in Explanation 1 to Entry 7 (i) of Notification No.
11/2017-Central Tax (Rate) dated 28.06.2017 give rise to doubt whether
supply of food and drinks by an educational institution to its students is
eligible for exemption under Notification No. 12/2017- Central Tax (Rate)
dated 28.06.2017 Sl. No 66, which exempts services provided by an
educational institution to its students, faculty and staff.

2) The matter has been examined. Notification No. 11/2017-Central Tax
(Rate) dated
28.06.2017, Sl. No. 7(i) prescribes GST rate of 5% on supply of food and
beverages services. Explanation 1 to the said entry states that such supply
can take place at canteen, mess, cafeteria of an institution such as school,
college, hospitals etc. On the other hand, Notification No. 12/2017-Central
Tax (Rate), Sl. No. 66 (a) exempts services provided by an educational
institution to its students, faculty and staff. There is no conflict between
the two entries. Entries in Notification No. 11/2017-Central Tax (Rate)
prescribing GST rates on service have to be read together with entries in
exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. A
supply which is specifically covered by any entry of Notification No.
12/2017-Central Tax (Rate) dated 28-06-2017 is exempt from GST
notwithstanding the fact that GST rate has been prescribed for the same
under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017.

2.1 Supply of all services by an educational institution to its students,
faculty and staff is
exempt under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017,
Sl. No. 66. Such services include supply of food and beverages by an
educational institution to its students, faculty and staff. As stated in
explanation 3 (ii) to Notification No. 12/2017-Central Tax (Rate) dated
28.06.2017 Chapter, Section, Heading, Group or Service Codes mentioned in
column (2) of the table in Notification No. 12/2017-Central Tax (Rate) dated
28.06.2017 are only indicative. A supply is eligible for exemption under an
entry of the said notification where the description given in column (3) of
the table leaves no room for any doubt. Accordingly, it is clarified that
supply of food and beverages by an educational institution to its students,
faculty and staff, where such supply is made by the educational institution
itself, is exempt under Notification No. 12/2017-Central Tax (Rate) dated
28.06.2017, vide Sl. No. 66 w.e.f. 01-07-2017 itself. However, such supply
of food and beverages by any person other than the educational institutions
based on a contractual arrangement with such institution is leviable to GST@
5%.

3) In order to remove any doubts on the issue, Explanation 1 to Entry 7(i)
of Notification
No. 11/2017-Central Tax (Rate) dated 28.06.2017 has been amended vide
Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018 to omit from
it the words “school, college”. Further, heading 9963 has been added in
Column (2) against entry at Sl. No. 66 of Notification No. 12/2017-Central
Tax (Rate) dated 28.06.2017, vide Notification No. 28/2018-Central Tax
(Rate) dated 31.12.2018.

4) Difficulty, if any, in implementation of this Circular may be brought
to the notice of
the Board.