GSTAT Hyderabad ruled that meals supplied by third-party caterers to hospitals are taxable under GST, as they don’t qualify as part of healthcare services under Notification 12/2017-Central Tax (Rate).
Outsourced Hospital Catering Liable to GST: GSTAT Hyderabad
The GST Appellate Tribunal, Hyderabad, held that food supplied by outsourced caterers to in-patients is not exempt from GST merely because it is consumed within a healthcare facility. The exemption under Notification 12/2017-Central Tax (Rate) applies only to services directly provided by healthcare institutions.
The Tribunal distinguished between healthcare 'services' and 'supply of food', categorizing the latter as a separate taxable supply under Section 7 of the CGST Act. It directed redetermination of tax liability under Section 73, allowing Rule 35 benefits where the taxpayer cooperated with proceedings.
This decision clarifies that outsourcing does not extend exemption to otherwise taxable supplies. Hospitals using third-party caterers must now evaluate GST implications and consider composite supply arguments. Practitioners should advise clients to structure contracts and invoicing accordingly.
Citations
- CGST Act, 2017, Section 7
- Notification 12/2017-Central Tax (Rate)
