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The subsidy amount received from the Government of Karnataka for the supply of service of food to the ultimate beneficiaries (consumers) in Indira Canteens by the applicant is excluded from the definition of consideration and would not form the part of the turnover on which tax is liable.

Valuation of Supply — The applicant states that the firm is engaged in the business of supply of food and beverages. Meanwhile the applicant has entered into a contract with Government of Karnataka for supplying food (breakfast, lunch and dinner) in the premises under the name and style of “Indira Canteen” in various districts located in the state of Karnataka. The Applicant sought Advance ruling on the question whether the subsidy received from the state government would form part of consideration under section 2(31) of the CGST Act? The Authority ruled out that the subsidy amount received from the Government of Karnataka for the supply of service of food to the ultimate beneficiaries (consumers) in Indira Canteens by the applicant is excluded from the definition of consideration and would not form the part of the turnover on which tax is liable. — Rashmi Hospitality Services Pvt. Ltd., In Re… [2019] 16 TAXLOK.COM 109 (AAR-Karnataka)

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