TMI Blog2018 (5) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... able. Hence, it is not possible to classify the whole contract as supply of services. Supply of food and beverages (cooked/MRP/packed), at defined menu and tariff, by the applicant to IRCTC/passengers on behalf of IRCTC, on board the Rajdhani/Duronto Express trains - Held that: - A train is a mode of transport and hence cannot be called as a restaurant, eating joint, mess or canteen etc. and hence catering services provided on-board a train are not covered under S. No. 7 (i) of the said Notifications as claimed by the applicant - The supply of goods i.e. food, bottled water etc. shall be charged to GST on value of goods (excluding the service charges) at applicable rates as pure supply of goods, as the same have no element of service. The supply of newspaper is separately invoiced and hence it shall be at 'Nil” GST under S. No. 120 of Notification No. 2/2017- Central Tax (Rate) dated 28.06.2017 and parallel Notifications of IGST and Delhi GST - the service charges are covered under Service Code (Tariff) 996335 in Group 99633 of heading 9963 of Annexure/Scheme of Classification of Services as “catering services in train”. The same are covered under S. No. 7 (ix) of Notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard a train are as follows: (A) SUPPLY OF FOOD THROUGH THE FOOD PLAZA ON THE RAILWAY PLATFORM (WITH A/C)/FOOD STALLS ON THE RAILWAY PLATFORM (WITHOUT A/C) a. In these places, food and beverages (packed/MRP/cooked) are supplied to the passengers/general public at the rates fixed by Indian Railways/IRCTC. Food plaza has space for the consumer to consume the said items on premises, if he so wish. Food stalls also has a small counter offering the consumers to use the same and consume the food. Else, the consumer may take away the same and consume as per his wish. (B) SUPPLY OF FOOD ON BOARD THE RAJDHANI TRAINS a. In the Rajdhani trains, menu for the purpose of supplying food items/beverages is fixed by IRCTC, with respect to each class of travel preferred by the passengers. The Bid Document for services in such trains specifically provides tariff for meals supplied. The above-mentioned document also provides defined MENU as per which, meals are supplied to passengers. Food is supplied and served to the passengers and money for the same charged from the Indian Railways/IRCTC by the Applicant. b. Further, in some cases, IRCTC supplies some items of dinner/lunch menu from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egory. (ii) As per Entry in Column (3) at S. No. 7 of Notification No 11/2017 - Central Tax (Rate) dated 28.06.2017 vide Notification No. 46/2017 -Central Tax (Rate) dated 14.11.2017, supply of any food article/beverage in any manner, whatsoever, for consumption on or away from the premises is taxable at the rate of 2.5%. In this case, food is supplied by waiters on premises of a running train. Thus, the supply of food falls under the above said category and is taxable under CGST @ 2.5 % and Delhi GST @ 2.5 %. IGST, wherever is applicable, is applicable at the rate of 5%. (iii) In respect of supply of newspaper, it is submitted that the same being exempt vide Entry at S. No. 120 of Notification No. 2/2017 - Central Tax (Rate) dated 28.06.2017, Entry at S. No. 120 of Notification No. 2/2017 - Integrated Tax (Rate) dated 28.06.2017 and Entry at S. No. 120 of Notification No. 2/2017 -State Tax (Rate) dated 30.06.2017, no tax is payable. 5. Comments of Jurisdictional Officer (CGST): With respect to supply of food in Food Plaza/Food Stalls : For the purpose of this activity, the applicants perusal of relevant portion in entry in column (3) at S. No. 7 entry (i) of Notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amenities provided in the unit of accommodation (given on rent for stay) like furniture, air conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit. 2.5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation no. (iv)] Explanation: - For the purposes of this notification,- (iv) Wherever a rate has been prescribed in this notification subject to the condition that credit of input tax charged on goods or services used in supplying the service has not been taken, it shall mean that,- (a) credit of input tax charged on goods or services used exclusively in supplying such service has not been taken; and (b) credit of input tax charged on goods or services used partly for supplying such service and partly for effecting other supplies eligible for input tax credits, is reversed as if supply of such service is an exempt supply and attracts provisions of sub-section (2) of section 17 of the Central Goods and Services Tax Act, 2017 and the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... All Services 71 Heading 9963 Accommodation, food and beverage services 80 Group 99633 Food, edible preparations, alcoholic and non alcoholic beverages serving services 81 996331 Services provided by restaurants, cafes and similar eating facilities including takeaway services, room services and door delivery of food 82 996332 Services provided by Hotels, Inn, Guest House, Club and the like including room services, takeaway services and door delivery of food 83 996333 Services provided in canteen and other similar establishments 84 996334 Catering Services in exhibition halls, events, marriage halls and other outdoor/indoor functions 85 996335 Catering services in trains, flights a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IRCTC. Only service charges are payable to the applicant where IRCTC has supplied the food and both service charges and catering charges are payable to the applicant where material is also supplied by them. The applicant is required to arrange necessary service gears and equipments including disposables viz. Service trays, paper napkins, tray mat, paper cup, thermo flask etc. for provision of onboard services. The applicant is also required to serve newspaper at a fixed rate of ₹ 2 per passenger. It is mandatory for the applicant to supply Rail Neer (Packaged Drinking Water) at rates fixed at ₹ 15 per bottle of one litre. The payment for on-board catering services is made by IRCTC to the Service Provider on agreed rates. The applicant is required to submit separate bills for supply of food item-wise and service charges. In the rates accepted by the IRCTC, separate rates for each item viz. Tea, Breakfast, Dinner supplied by the applicant and separate service charges are given for serving tea, breakfast, dinner, whether provided by the applicant or provided by IRCTC from their base Kitchens. In the invoices issued by the applicant to IRCTC, similarly separate rates of ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 35 etc. No service charges were received by the applicant from the passengers over and above the fixed rates for each item. 13. It is observed that, for any supply to be covered in the said Notification No. 11/2017 -Central Tax (Rate) dated 28.06.2017 as amended vide Notification No 46/2017- Central Tax (Rate) dated 14.11.2017 and parallel Notification of IGST and Delhi GST, the activity must be a service i.e. a pure supply of goods even if intended to be used as a food is not covered in the said notification. Further, it is observed that as per Section 7(l)(d) of CGST Act, 2017 and as per Schedule II, Point 6, the following composite supplies shall be treated as a supply of services, namely:- (a) Works contract as defined in clause (119) of Section 2; and (b) Supply, by of or as part of any service in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply of service is for cash, deferred payment or other valuable consideration. 14. The applicant has claimed that their supply is a composite supply and hence should be treated as supply of services. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdinary course of business and what constitutes principal supply in such composite supplies. The concept of composite supply under GST is identical to the concept of naturally bundled services prevailing in the existing service tax regime. This concept has been explained in the Education Guide issued by CBEC in the year 2012 as under: Bundled service means a bundle of provision of various services wherein an element of provision of one service is combined with an element or elements of provision of any other service or services. An example of 'bundled service' would be air transport services provided by airlines wherein an element of transportation of passenger by air is combined with an element of provision of catering service on board. Each service involves differential treatment as a manner of determination of value of two services for the purpose of charging service taxis different. The rule is - 'If various elements of a bundled service are naturally bundled in the ordinary course of business, it shall be treated as provision of a single service which gives such bundle its essential character' Illustrations : * A hotel provides a 4-D/3- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch help in better enjoyment of a main service. For example, service of stay in a hotel is often combined with a service or laundering of 3-4 items of clothing free of cost per day. Such service is an ancillary service to the provision of hotel accommodation and the resultant package would be treated as services naturally bundled in the ordinary course of business. * Other illustrative indicators, not determinative but indicative of bundling of services in the ordinary course of business are: - There is a single price or the customer pays the same amount, no matter how much package they actually receive or use - The elements are normally advertised as a package - The different elements are not available separately - The different elements are integral to one overall supply. If one or more is removed, the nature of the supply would be affected No straight jacket formula can be laid down to determine whether a service is naturally bundled in the ordinary course of business. Each case has to be individually examined in the backdrop of several factors some of which are outlined above. The above principles explained in the light of what constitutes a naturally bundle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide music and dance floor. Further, in outdoor catering, service element is much more as compared to service element in case of service provided by the Restaurant. 21. Hence, taxing authorities in each case have to ascertain whether a transaction is pure supply of goods or the same is or composite contract involving sale of goods and services and whether the said composite contract can be split into goods and services. They are also required to determine whether services are incidental to the supply of goods or whether services component is predominant in the contract. 22. The contention of the applicant that a train is covered under entry (i) of S.No. 7 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 being a restaurant, eating joint including mess, canteen is not acceptable as a train is a mode of transport and passenger travel in a train to go to various far away places they do not visit trains for the purpose of having food. The fact that food is consumed by them during their travel does not mean that a train should be considered as a restaurant or an eating joint. RULING 23. In the case of supply of food and beverages (cooked/MRP/packed), at de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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