GSTAT rules outsourced hospital catering is taxable

The Hyderabad Bench of the Goods and Services Tax Appellate Tribunal (GSTAT) has ruled that food supplied by an outsourced caterer to hospital in-patients does not qualify as a tax-exempt composite healthcare service.

The dispute involved food services provided to MGM Hospital. While the First Appellate Authority had previously ruled that the food supplied to in-patients was part of a composite healthcare service—and therefore exempt from GST—the Department challenged this decision. The Department argued that the respondent was an independent outsourced caterer rather than a healthcare provider or clinical establishment, and thus the food supply should be taxed as a restaurant service.

The GSTAT Bench observed that the respondent was only providing a single supply: the supply of food. The tribunal concluded that because the caterer was not providing healthcare services themselves, the provisions for composite supply under Section 2(30) of the Act could not be applied. Consequently, the tribunal held that the previous authority erred in treating the catering as part of the exempt healthcare service.