The Tamil Nadu State Appellate Authority for Advance Ruling (AAAR), in the case of M/s. Frutta Services Private Limited (Order-in-Appeal No. AAAR/06/2026(AR)), on 8 May 2026 upheld the levy of 18% GST on institutional food supply services provided to corporate entities, holding that such activities fall within the scope of “Outdoor Catering Services” and not “Restaurant Services.” The Appellate Bench comprising Member (CGST) Madan Mohan Singh and Member (SGST) S. Nagarajan dismissed the appeal filed by the assessee challenging the earlier advance ruling.

The appellant was engaged in supplying food and beverages to employees of various corporate clients at their office premises under contractual arrangements. The company contended that since the food was prepared and served for consumption in designated dining areas, the activity should qualify as “Restaurant Service” taxable at 5% GST without Input Tax Credit (ITC). The Revenue, however, maintained that the activity was in the nature of institutional or outdoor catering carried out pursuant to specific contracts with corporate entities. Tribunal pointed out that

The AAAR observed that “Restaurant Service” ordinarily contemplates supply by a restaurant, eating joint or mess having a public-facing character, whereas the appellant was rendering services exclusively under contractual arrangements to identified institutions.

The Authority noted that the food supply was not made from the appellant’s own restaurant premises to walk-in customers, but was carried out at the premises of corporate clients under pre-determined agreements. It held that such arrangements are distinct from conventional restaurant operations and squarely fall under the category of catering services covered under Entry 7(vi) of Notification No. 11/2017-Central Tax (Rate).

The Bench further clarified that merely because food is consumed at a designated dining place within the client’s premises, the activity does not acquire the character of “Restaurant Service” eligible for concessional 5% GST.

Rejecting the appellant’s reliance on treatment applicable to food delivery aggregators and similar business models, the Authority held that institutional catering contracts operate under a different statutory framework. Accordingly, the AAAR concluded that the services supplied by the appellant are taxable at 18% GST with eligibility to avail Input Tax Credit. The appeal was therefore dismissed and the earlier ruling was affirmed.

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