Food supplies to ITIs akin to mid-day meal to schools, so GST exempt

The Kerala AAR ruling came on an application made by a service provider, HV Azeez.

New Delhi: The supply of food items under government schemes to Industrial training institutes (ITI) will be treated at par with supply of mid-day meals to schools and not attract GST.

In a ruling, the Authority for Advance Ruling (AAR) has brought ITIs at par with education institutions equivalent to higher secondary education and thereby exempted supply of food items under a government programme to these vocational training institutes from applicability of GST.

The Kerala AAR ruling came on an application made by a service provider, HV Azeez. The service provider has sought clarification from AAR whether his supply of GST exempt food items such as eggs, milk, banana to ITIs as per government scheme will be taxable. Since Azeez had taken GST registration, the question sought for clarification was whether TDS on such supply could be refunded and whether the entity was required to have GST registration at all.

The AAR ruled that since ITIs were giving certificate equivalent to 12th or 10th (if students take the tests for two additional papers under National Institute of Open School), they were at par with other higher secondary education institutes. This itself, gives supply of food to ITIs immunity from taxes (GST).

Also, as the supply of food items includes all GST exempt products, the applicant is not required to take GST registration. And in case GST registration has been taken and TDS deducted on such supplies, it would be liable for a refund.

GST registration is mandatory for all businesses with a turnover of over Rs 20 lakh but this is not required for supply of GST exempt goods and services. Similarly, TDS is levied at 2 per cent, if payment for contract exceeds Rs 2.50 lakhs. But, this is not required for GST exempt supplies.