The Ministry of finance through Circular No. 28/02/2018 - GST, given the Clarifications regarding charge of GST on College Hostel Mess Fees, Canteen fees etc.
As per the cited circular., the clarification is as given below:
1. The educational institutions have mess facility for providing food to their students and staff. Such facility is either run by the institution/ students themselves or is outsourced to a third person.
2. Generally Supply of food or drink provided by a mess or canteen is taxable at 5%
without Input Tax Credit [Serial No. 7(i) of notification No. 11/2017-CT (Rate) as amended
vide notification No. 46/2017-CT (Rate) dated 14.11.2017 refers].
3. If the catering services is one of the services provided by an educational institution to its students, faculty and staff and the said educational institution is covered by the definition given under para 2(y) of notification No. 12/2017-Central Tax (Rate), then the same is exempt. [Sl. No. 66(a) of notification No. 12/2017-Central Tax (Rate) refers]
Para 2(y) says the following:
“educational institution” means an institution providing services by way of,-
(i) Pre-school education and education up to higher secondary school or equivalent; (ii) Education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force; (iii) Education as a part of an approved vocational education course;
4. If the catering services, i.e., supply of food or drink in a mess or canteen, is provided by anyone other than the educational institution, then it is a supply of service to the concerned educational institution and attracts GST of 5% provided that credit of input tax charged on goods and services used in supplying the service has not been taken.