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2018 (11) TMI 1266 - AAAR - GSTClassification of supply - Supply of goods or supply of services - composite supply or mixed supply - Supply of pure food items such as sweetmeats, namkeens, cold drink and other edible items from sweetshop which also runs a restaurant - bundled services - rate of tax - entitlement of input tax credit. Held that:- Composite supply is one where two or more goods or services or both are supplied together, in a natural bundle and in a normal course of business, provided one of which is a principal supply. However, principal supply will be that supply which is predominant over other supplies. This means that the goods and services are bundled owing to natural necessities. The composite supply is taxed at the rate applicable to the principal supply whereas a Mixed supply means two or more individual supplies of goods or service, or any combination thereof; made in conjunction with each other by taxable person for a single price where such supply does not constitute a composite supply. In Mixed Supply, the combination of goods, and/or services is not bundled due to natural necessities, and they can be supplied individually in the ordinary course of business. - In order to identify if the particular supply is a Mixed Supply, the first requisite is to rule out that the supply is a composite supply. A supply can be a mixed supply only if it is not a composite supply, As a corollary it can be said that if the transaction consists of supplies not naturally bundled in the ordinary course of business then it would be a Mixed Supply. Once the amenability of the transaction as a composite supply is ruled out, it would be a mixed supply, classified in terms of a supply of goods or services attracting highest rate of tax. In the case of sweet shop cum restaurant, the services from the restaurant is a principle supply which provides a bundled supply of preparation & sale of food and serving the same and therefore it constitutes a composite supply - It further satisfied the following conditions of a composite supply: (i) Supply of two or more goods or services or both together; and (ii) Goods or services or both are usually provided together in the normal course of business. In the instant case the nature of restaurant services is such that it may be treated as the main supply and the other supplies combined with such main supply are in the nature of incidental or ancillary services. Thus restaurant services get the character of predominant supply over other supplies. Therefore in the present case the supply shall be treated as supply of service and the sweet shop shall be treated as extension of the restaurant in as much as the said activity covered under Schedule II of the Act ibid. Rate of GST - Held that:- Since we already held above that the activity of the applicant come under the purview of “restaurant services”, the same falls under Heading 9963 of GST rates on services under Notification No. 11/2017-Central Rate (Tax) dated 28.06.2017 (as amended time to time) - the rate of GST on aforesaid activity shall be 5% as on date. Admissibility of ITC credit - Held that:- The applicant cannot avail credit on the GST paid on the goods and services used in their Said activity in terms of the notification. Ruling:- The supply shall be treated as supply of service and sweet shop shall be treated as extension of restaurant. The rate of GST on aforesaid activity will be 5% as on date, on the condition that credit of input tax charged on goods and services used in supplying the said service has not been taken. All the items including takeaway items from the said premises shall attract GST of 5% as on date subject to the condition of non availment of credit of input tax charged on goods and services used in supplying the said service.
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