Mid-Day Meal Scheme: CESTAT Grants Service Tax Relief To Government Catering Institute

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has granted relief to a government-run catering institute that supplies Mid-Day meals to the UT education department.

It reiterated that the preparation and supply of cooked food under the Mid-Day Meal Scheme does not amount to 'outdoor catering' and is therefore not liable to service tax.

The coram, consisting of Judicial Member SS Garg and Technical Member P Anjani Kumar stated that the sale of mid-day meals by Chandigarh Institute of Hotel Management & Catering Technology to the Chandigarh Education Department is not considered 'Outdoor Catering Services.'

The appellant only cooked the food, and the Education Department's staff collects and transports the meals from the appellant's premises.

In this case, the Institute, a government-established institute registered for certain taxable services, was also supplying cooked food under the Mid-Day Meal Scheme to the Education Department of the Chandigarh Administration.

As per the department, the supply of cooked food in midday meals amounts to rendering 'Outdoor Catering Services' and raised a service tax demand.

A show-cause notice was issued to the Institute, demanding service tax on the supply of cooked food in the Mid-Day Meal. The service tax demand was confirmed through an order, which was upheld by the Commissioner (Appeals).

The counsel for the catering institute argued it has supplied the meals at its own premises and did not charge/collect nor pay service tax on the same, as the same was considered to be not liable to service tax as per applicable provisions of the Act. This included 'Outdoor Catering Services' as defined under section 65(105) (zzt) of the Finance Act, 1994.

Agreeing with the catering institute, it opined that the sale of Mid-Day Meal by the appellant to the Education Department of Chandigarh does not fall within the definition of 'Outdoor Catering Services.'

The bench further stated that the appellant merely cooked the food, which is being picked up by the staff assigned by the Education Department and stationed at the appellant's institute. The cooked meals are picked up by the Education Department through its contracted transportation agencies and transported from the appellant's premises.

The tribunal further noted that the institute is duly registered under the Sales Tax Department of Chandigarh and is paying sales tax on the sale of cooked food for Mid-Day Meals.

Quoting the ruling in Ambedkar Institute of Hotel Management vs. Commissioner of Central Excise & Service Tax, Chandigarh, (2015) the tribunal observed that "since the appellant are preparing midday meals in their Institute and not in the schools where the meals are served and are not involved in serving of the meals in any manner, they are not covered by the definition of outdoor caterer' and hence their activity of preparing and supplying meals for midday scheme would not be covered by the definition of 'taxable service' under Section 65(106(zzt)."

In view of the above, the tribunal allowed the appeal.

Citation: 2026 LLBiz CESTAT (PB) 15

Case Title: Chandigarh Institute of Hotel Management & Catering Technology v. Commissioner of CGST, Chandigarh

Case Number: Service Tax Appeal No. 53928 of 2014

For Appellant/Assessee: Rakesh K. Khanna, CA

For Respondent/ Department: Anurag Kumar and Amita Gupta