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    Generally catering Services are taxable at the rate of 18% with ITC benefit as per Notification No 11/2017 dated 28th June 2017 and supply of food through restaurant, mess, canteen facilities are taxable at rate of 5% without ITC benefit. The following legal issues broke down with respect to the applicable tax rate for the following cases–

    • Canteen Facilities at Work Places or Hospitals: Canteen facility will be provided by companies or hospitals to meet the requirements of employees or patients. These canteens are maintained by outsourcing the job of food preparation and supply at the respective canteen facility to a caterer. Whether the caterers who supply the food to companies or hospitals (who in turn supply to employees or patients) would attract GST at 5% without ITC benefit (supply at canteen) or at 18% with ITC benefit (supply as caterer)?
    • Food supply in a Hostel maintained by Educational Institutions: Similar to above, Hostel facility maintained by educational institutions, where the food is served to students by self-preparation or outsourcing the same to a caterer. Whether the educational institution is required to charge GST on such food supply or can it claim exemption as the said supply is part of exempt educational services? In case the food preparation is outsourced, whether the caterer is required to charge GST at 5% without ITC benefit or at 18% with ITC benefit?
    • Supply of Food by Caterers of IRCTC: Many caterers by virtue of their contract with IRCTC, supply the food to passengers on board, train or on platform. Whether, such caterers are required to charge GST at 5% without ITC benefit or at 18% with ITC benefit?

    For example, Company ABC Ltd is engaged in supply of food to its employees through canteen facility by getting the food prepared through outdoor caterer. In this case, the conservative view is that rate of tax applicable for the outdoor catering services obtained by the ABC is 18% and rate of tax applicable for the canteen facility provided by ABC to the employees is at 5%(without ITC) i.e. a total of 23%(18%+5%) tax is being paid by the employees consuming food in such canteen which results in huge tax burden. Upon representation of the issue to the GST council, the council has come up with remedial measures vide their council meeting held on 21st of June 2018.

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       Board of directors are the key persons of a company who are appointed to act on behalf of shareholders to run day to day affairs of the business. The board are directly accountable to shareholders and each year the company will hold an Annual General meeting (AGM) at which the directors must provide a report to shareholders on the performance of the company, its future plans and strategies. Board of directors discharges the dual functions. They are:

    • Running Business
    • Internal controls

    In case of internal controls the board creates a sub group of the directors which is called Audit Committee.


    The short question that is tried to be answered in this note is ‘whether the provisions of Section 44ADA shall be applicable to the remuneration and other receipts by a partner from a professional services firm? 

    Before going into specifics, it is important to understand the modus operandi of the partner and professional services firm and the provisions of Section 44ADA in light of such modus operandi. 

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