College Supplying Food Through Canteen Managed By Educational Trust Is Liable For Registration Under KVAT Act: Kerala High Court

The Kerala High Court held that college supplying food through canteen, though managed by educational trust, is liable for registration under KVAT Act. The bench disagreed with the assessee that even if it is assumed that the sales in the canteen are found to be assessable under the provisions of the VAT, it falls within the threshold limit and therefore, the assessee cannot be compelled to take registration. It may be true that the sales across the counter in the canteen may be within the threshold limit, but however that by itself will not enable the assessee to contend that it is not bound to take registration under the provisions of the KVAT Act, opined the Division Bench comprising of Justices A.K. Jayasankaran Nambiar and Easwaran S. The assessee/petitioner is a Dental College, managed by an education trust, named Annoor Educational Trust, for the purpose of establishing and conducting charitable educational institutions. Proceedings have been initiated against the assessee under Section 67(1) of the Kerala Value Added Tax Act, 2003 for not taking registration under the said Act. Aggrieved by the orders of assessment, the assessee filed an appeal before the Deputy Commissioner (Appeals) which allowed the appeal. Aggrieved by the order of appellate authority the State approached the Kerala Value Added Tax Appellate Tribunal contending that the assessee cannot escape the mandatory requirement of registration under the KVAT Act, since they are supplying food to students through canteen. The Tribunal concluded that though the mess fees cannot be considered as sales, if the canteen sales are termed as mess fees, then such exemption is not allowable and therefore, found that the assessee is liable to take registration under the provisions of Sections 15 read with 6 of the Act. The Tribunal directed the assessee to take registration and further directed the assessing authority to complete the assessment under Section 25(1) of the Act. The assessee submitted that the primary activity of the assessee being imparting education, any ancillary business done by it in pursuance to the said avocation cannot be construed as a business and, therefore, the assessee will not come within the definition of the term “dealer”. The bench after referring to the definition of “business” and “dealer” under the KVAT Act stated that “the definition is inclusive enough to cover each and every activity done by a person, other than in due course of his business, the assessee cannot contend that he will fall otherwise.” In fact, the tribunal has only remanded the matter back to the authorities to verify the question as to whether the canteen sales are being termed as mess fees. The liability to pay tax would definitely depend upon the verification ordered to be conducted by the tribunal, added the bench. In view of the above, the bench dismissed the revision petition. Case Title: M/s Anoor Dental College v. State of KeralaCitation: 2025 LiveLaw (Ker) 240 Case Number: OT.REV NO. 4 OF 2025 Counsel for Petitioner/Assessee: P.N. Damodaran Namboodiri and Hrithwik D. Namboothiri Counsel for Respondent/Department: Resmitha Ramchandran Click here to download Order/Judgement

College Supplying Food Through Canteen Managed By Educational Trust Is Liable For Registration Under KVAT Act: Kerala High Court

Mehak Dhiman

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