GST AAR: Outdoor Catering Taxable at 5% Without ITC; No Option for 18% with ITC

The Authority for Advance Ruling in Tamil Nadu broke it down: Both types of services the applicant offers are counted as outdoor catering each one is a composite supply. So, GST is set at 5% (without Input Tax Credit) because of Notification 11/2017. The taxpayer doesn’t get a pick; they can’t go for 18% with ITC.

Fact of the Case

M/s. Friends Catering CBD is a GST-registered company based in Coimbatore. They provide outdoor catering, but they don’t offer hotel rooms and don’t work out of “specified premises” as defined in GST law. There are two ways they run their business. First, they handle everything: prepping food, serving, and event support at the client’s location. Second, sometimes they just make the food at their own spot and deliver it for events, no staff or support—once the food’s handed over, their job’s done. They wanted some answers about the GST rate, whether they could claim ITC, and how their services are classified (the HSN code). They argued they should be allowed the flexibility to either pay GST at 5% without ITC, or 18% with ITC—whatever fits their needs.

Issue Involved

The issues the Authority looked at were pretty straightforward:
– Can the applicant pick between 5% GST without ITC and 18% GST with ITC for outdoor catering?
– What GST rate applies if they just deliver food but do not provide staff or on-site service?
– How should their services be classified (HSN/SAC code)?

Judgement

Both ways of doing business count as a “composite supply of service” under Schedule II of the CGST Act, since it’s not just food—they’re adding in the prep, delivery, and support. These services are classified as “outdoor catering” under SAC 996334. The Authority said their services fit squarely under Entry 7(iv) of Notification No. 11/2017 (as amended), which sets GST at 5% (split between CGST and SGST) and says you can’t claim ITC.

One crucial point is the Authority made it crystal clear that you don’t get a choice in rate. If your service fits this category, 5% GST without ITC is mandatory. The 18% rate with ITC only kicks in if your service doesn’t fit under any specific entry, and that’s not the case here. Even if all they do is supply food without serving or support, it still counts as outdoor catering and gets taxed at 5% GST, with no ITC allowed.