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vat on outdoor catering service

Arun Kumar Aggarwal (Service) (65 Points)

15 December 2007

Dear Sir,

I got a bill for Rs 120000 from an outdoor catering service.Service tax has been charged on 60% (Rs.72000).Vat should be charged on how much amount?Whether on the full Rs. 120000/- or Only the material portion of the bill ( Rs.48000/-).

CA. Arun K. Aggarwal.

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6 Replies

CA. O.P. Agarwalla (C.A.) (2916 Points)
Replied 17 December 2007

As per Constitution of India:-
(29A) “tax on the sale or purchase of goods” includes—
(a) a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration;
(b) a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;
(c) a tax on the delivery of goods on hire-purchase or any system of payment by instalments;
(d) a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration;
(e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration;
(f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration;
and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made;

What I understand from the above clause is that, supply of food does not fall under the category of
”works contract”. Now, it is advisable to find out, whether your State VAT Act is saying about any method of taxation of such catering Contract? If the State Act is silent in this regard, in my opinion:-

1) If value of foods is charged separately, VAT on such value will be applicable.
2) If it is a composite Bill, the Caterer should charge VAT accordingly.

I must mention here that, the above is my personal view and is not supported by any case laws.

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Ritesh (CA Final) (326 Points)
Replied 19 December 2007

First of ALL, service tax will be charged on Rs. 60,000 not on Rs. 72,000 since Outdoor caterer enjoys 50% abatement if he supplies food also & bill is inclusive of Food charges. As far as Vat is concerned, I am not so sure.

ANIL LANJEKAR (SERVICE) (24 Points)
Replied 26 August 2009

Hi, we are outdoor caterer supply foods and service. i want to knwon how much vat and service tax charge in bill. normally we prepare bill of full amount of supply of food and charged 12.5% vat, then we charges service charges in same bill and put service tax on both food sale and service charge @ 5.15% ,is that ok? some time we charged Transportation charges to customer in seperate bill and put service tax @ 2.57% even we are outdoor caterers, there is any provision that we can use both of categary of service tax. please advice thank u.

ANIL LANJEKAR (SERVICE) (24 Points)
Replied 26 August 2009

hi, i was read Notification no CE-20/ST/Trade notice/97 dt 5.08.97, its mention that the service tax is chargeble @ 5% and the value of the taxeble service provided by outdoor caterer to client for services in relation to such catering including the charges for food, delible preperation. and ur forum said service tax is not leviable if supply of food is shown seperatly only vat is applicable on same. pls let me know exact defination pls i m dam confused;