HOTEL & RESTURANT SERVICE, Goods and Services Tax - GST

[MUKESH SAXENA]

A Person is going to hotel with resturant and room services. some quries form the service provider that. If he opt regular basis option.

1- what will be GST tax rate will be apply on the service of resturant service ( Food, Cold Drinks,Mineral water,coffee,Tea fast food etc ) such as 5%,12%,18%

2- if he opt GST 5%, can he charge GST from customers under regular basis optopn

3- can be taken benefit of ITC on purchase of material of assets and raw material.

4- If he provide food in rooms what will be GST rate applicable

5- If he provide grounds for functions, what will be GST rate tax applicable

Please provide others instructions for the same services

Thanks

Posts / Replies

[Padmanathan Kollengode]

1. In my opinion, foor or any other article for human consumption which is "served" in the restaurant should treated as supply of restaurant service (refer Entry 6 (b) of Sch II to CGST Act, 2017) and hence, shall be taxable under Entry 7 (ii) or 7 (vi) of Notification No. 11/2017 - CT (R) based on whether it is in "specified premises" or not.

Sale of cold drinks, mineral water, namkeen etc "over the counter" will attract respective rate of GST as supply of goods as per Notification No 1/2017-CT (R)

2. Assuming that by the term "he opt GST 5%" in your query, you are referring to the composition scheme under section 10, he cannot collect GST from customers.

If he is paying tax @ 5% as per Entry 7 (ii) of Notification No 11/2017 - CT (R), he can collect and pay GST.

3. ITC shall not be available if he has opted for composition scheme or covered under Entry 7(ii) of Notification No 11/2017- CT(R).

4. In my view, it is a composite supply of service and accommodation service shall be principle supply. In my view, supply of food at room is naturally bundled with accommodation in room as it is standard practice in hotel industry to provide food to guests in room. Therefore, the rate of tax shall be based on Entry 7(i) or 7(vi). (I am fully open to contrary views)

5. renting of ground for functions will attract 18%.

[Lav Prajapati]

Dear Sir reply of your Query

1. In case of restaurant services that is fall under composition scheme under section 10 and GST rate will be applicable @5% as per entry no. 7 of notification no. 11/2017 of CGST Act.

2. you can not opt regular scheme for Restaurant services, so as per provision you can not charge GST from the customer under regular scheme.

3. earlier discussed Restaurant service covered under composition scheme, ITC under composition on Capital goods or Raw material not availed to registered person and he can not use for discharge of output liability

4. there is not change in GST rate if you are provide restaurant services other then specified premises as per entry no. 7 of notification 11/2017.

5. As earlier discussed in the point 4 there is not change in GST rate if you are provide restaurant services other then specified premises as per entry no. 7 notification 11/2017.

[Padmanathan Kollengode]

Dear Lav Prajapati Sir,

I respectfully disagree with your views for the following reasons:

A. Section 10 (composition scheme) and Section 9(1) (regular tax payment) are mutually exclusive. i.e. they CANNOT exist simultaneously

A. 1. Section 10(1) reads as under:

10. (1) Notwithstanding anything to the contrary contained in this Act but subject to the provisions of sub-sections (3) and (4) of section 9, a registered person, whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay, in lieu of the tax payable by him under sub-section (1) of section 9, an amount of tax calculated at such rate as may be prescribed, but not exceeding,–

Therefore, the payment of tax calculated at prescribed rate under section 10 is in lieu of tax payable under section 9(1).

Though the rate of tax as per section 9(1) read with Notification 11/2017-CT(R) Entry 7 and Tax calculated under section 10 are both 5% (2.5% CGST and 2.5%), it does NOT mean that both the tax payable are one and the same. As mentioned, payment of tax under section 9(1) and section 10 are mutually exclusive.

B. Composition scheme under section 10 is only OPTIONAL. It is NOT compulsory.

10. (1) Notwithstanding anything to the contrary contained in this Act but subject to the provisions of sub-sections (3) and (4) of section 9, a registered person, whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay, in lieu of the tax payable by him under sub-section (1) of section 9, an amount of tax calculated at such rate as may be prescribed, but not exceeding,–

Only where the registered person opts to pay tax under section 10, he cannot collect the same from the recipient. In case he does not opt to pay tax under section 10, he will be liable to pay tax under section 9(1) and hence, he can collect 5% from customers and pay.

[Lav Prajapati]

Dear Padmanathan Kollengode sir ji

Thanks for your kind guidance.

[KASTURI SETHI]

Reply by Sh.Padmanathan Kollengode is par excellence.

[Shilpi Jain]

1- what will be GST tax rate will be apply on the service of resturant service ( Food, Cold Drinks,Mineral water,coffee,Tea fast food etc ) such as 5%,12%,18%

If the value of service charged for accommodation does not cross 7500 per day per room, then restaurant service will be liable @ 5% with no ITC.

2- if he opt GST 5%, can he charge GST from customers under regular basis optopn

If composition scheme then cannot collect GST from customers. But under regular scheme (which is also 5% GST), GST can be collected from customers. I dont understand why will anyone opt for composition for restaurant since rate of tax and ITC conditions are similar.

3- can be taken benefit of ITC on purchase of material of assets and raw material.

If restaurant 5% then no ITC. Can claim ITC for accommodation services as per rule 42 and 43

4- If he provide food in rooms what will be GST rate applicable

Food in room is generally not part of accommodation package. Will not be a composite supply. Will be liable at the rate applicable for the restaurant service @ 5%

5- If he provide grounds for functions, what will be GST rate tax applicable

if this is only renting without any food supply then not an outdoor catering service. Liable @ 18%

However, if it is a contract of outdoor catering then we would require to examine whether the person is a supplier of services specified premises or the premises where the supply is provided is a specified premises.

[Padmanathan Kollengode]

Restaurant service is defined under Notification No 11/2017 as under:

‘Restaurant service’ means supply, by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied.

Bare reading of above definition reveals that even if food is provided in hotel room by restaurant, it would still be "restaurant service". ie it is not necessary that food has to be consumed only at restaurant.

Therefore the aspect which would have be required to be looked into is whether such supply of good is part of the accommodation service or not, as rightly pointed out by Shilpi Ma'am.

It is a common practice for the Hotels do provide food as part of accommodation service also such as complimentary breakfast etc. This may fall under composite supply.

In other cases, where it is not part of accommodation service and the customer orders food from room, It would be supply of 'restaurant service'.

I agree with Shilpi Ma'am's view to that extent.

[Shreyansh Mehta]

Suppose if the Hotel has various rooms with tarif more than Rs 7500 and tariff less than Rs 7500 .Then what should be the liability on food supllied to customers who has booked rooms. I have to charge 18% for all the foods supply to rooms if my one room croses the 7500 Limit.

If someone has booked room with Rs 4000 then logically i have to charge 5% GST but some professionals are advising to Charge 18% Gst on food for all the rooms becuase notification is not clear. And i have normal restuarent in the hotel then what should i charge to other customers i.e normal visitors 5 % or 18% because Room croses the Limit of 7500

[GUNASEKARAN K]

S.No.	Chapter/ Section/ Heading	Room Rent	GST Applicable	Conditions if any
1	9963	Rent up to Rs.1000/-	12%
2		Rent from Rs.1001/- to Rs.7500/-	12%	(Accommodation, food and beverage services) – “(i) Supply of “hotel accommodation” having a value of supply of a unit of accommodation above Rs.1000 but less than or equal to Rs.7500 per unit per day or equivalent.”
3		Rent from Rs.7501/- or More	18%
S.No.	Chapter/ Section/ Heading	Room Rent	GST Applicable	Conditions if any
1	9963 (Accommodation, food and beverage services)	All stand-alone restaurants irrespective of air-conditioned otherwise	5%	No ITC
2		Food parcels (or takeaways)	5%
3		Restaurants in hotel premises having room tariff of less than Rs 7500 per unit per day	5%
4		Restaurants in hotel premises having room tariff of Rs 7500 and above per unit per day (even for a single room)	18%	With ITC
5		Indian Railways Catering and Tourism Corporation Ltd. or their licensees / Indian Railways	5%	No ITC
6		Outdoor catering services other than in premises having daily tariff of unit of accommodation of Rs 7501	5%
7		Catering in premises with daily tariff of unit of accommodation is Rs 7501 and above	18%	With ITC

[GUNASEKARAN K]

S.No.	Chapter/ Section/ Heading	Room Rent	GST Applicable	Conditions if any
1	9963	Rent up to Rs.1000/-	12%
2		Rent from Rs.1001/- to Rs.7500/-	12%	(Accommodation, food and beverage services) – “(i) Supply of “hotel accommodation” having a value of supply of a unit of accommodation above Rs.1000 but less than or equal to Rs.7500 per unit per day or equivalent.”
3		Rent from Rs.7501/- or More	18%
S.No.	Chapter/ Section/ Heading	Restaurant & Room Rent	GST Applicable	Conditions if any
1	9963 (Accommodation, food and beverage services)	All stand-alone restaurants irrespective of air-conditioned otherwise	5%	No ITC
2		Food parcels (or takeaways)	5%
3		Restaurants in hotel premises having room tariff of less than Rs 7500 per unit per day	5%
4		Restaurants in hotel premises having room tariff of Rs 7500 and above per unit per day (even for a single room)	18%	With ITC
5		Indian Railways Catering and Tourism Corporation Ltd. or their licensees / Indian Railways	5%	No ITC
6		Outdoor catering services other than in premises having daily tariff of unit of accommodation of Rs 7501	5%
7		Catering in premises with daily tariff of unit of accommodation is Rs 7501 and above	18%	With ITC

[Ashok Charan]

Dear Sir,

my question is with reference to what is defined as " Specified Premises" under the notification. does this mean that such restaurant needs to be within the Hotel where outsiders are typically not allowed or it could be anywhere in the building even if the access to such restaurant is open to public, just because it is located in the premises which has a hotel with tariff > 7500, such restaurant attract 18% GST instead of 5%

One of our restaurants is located in the ground floor of a building where there is hotel accommodation with tariff> Rs. 7500 on other floors, hotel also runs a food court on top floor. our restaurant serves all clients outsider and some of the hotel customers also. Outsiders have aa free access to restaurant without going through hotel accommodation. we also deliver food through swiggy/zomato to outside customer,

Question : Should we charge 18% with input or go with 5% without ITC??

Reference to AAR ruling in 2020 (2) TMI 553 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA