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TMI Blog2020 (4) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... n No.11/2017- Central Tax (Rate) i.e. what will be the liability to pay GST i.e. to say that declared tariff represents only the charges for room stay plus service charge and the customer books only hotel accommodation and the rest optional facilities are procured after checking in at the hotel ? (ii) If the answer to query no. 1 results in liability to pay GST as in tariff being lesser than Rs. 7,500/-, whether the applicant will be liable to pay 5% GST on restaurant services to the guest who stays at hotel as well as to any outsider who comes just to eat at the restaurant and not 18% GST in terms of Notification no. 46/2017- Central Tax (Rate)? (iii) If the applicant is charging money towards room stay, breakfast, airport pick up and drop, as well as extra bed plus meals i.e. the package covers everything and individual value is not assigned at the time of booking but when invoice is given to the customer there is a specific mention of each item and separate value assigned to each service, and the sum total exceeds Rs. 7,500/-, what would be the liability of GST i.e. the price offered to customer represents a package offering a bouquet of services ? (iv) If the answer to qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here such food or any other article for human consumption or drink is supplied, other than those located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent. Explanation.- "declared tariff includes charges for all 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)]."; "(iii) Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink, where such supply or service is for cash, deferred payment or other valuable consideration, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. * Definition of Mixed Supply: Sec 2(74) defines Mixed Supply and it reads as follows:- (74) "mixed supply" means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. Clarification issued: * Circular Number 27/2018-GST F. No. 354/107/2017-TRU The Hon'ble Ministry of Finance has issued a circular whereby certain clarifications have been made and the relevant extract of the same is reproduced below:- Sr.No. Questions/Clarifications Sought Clarifications 1 1. Will GST be charged on actual tariff or declared tariff for accommodation services? 1. Declared or published tariff is relevant only for determination of the tax rate slab. GST will be payable on the actual amount charged (transaction value). 2. What will be GST rate if cost goes up (more than declared tariff) owing to additional bed. 2. GST rate would be determined according to declared tariff for the room, and GST at the rate so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d tariff given to the proposed customer at time of Breakfast 1000 Optional Service added extra Airport pick up and drop 1000 Optional Service added extra Food bill 1800 Ate dinner at restaurant Heritage Walk 800 Optional Service added extra Total Invoice 12000 The applicant also runs a restaurant business apart from accommodation and is unable to ascertain the rate of GST to be charged. It is very pertinent to note that breakfast, airport pick up drop, heritage walk, charges for lunch/dinner are optional services and one may or may not choose to avail these additional services. Hence, these services cannot be said to be naturally bundled and there is no composite supply. Each service is unique, different, not inter dependent on each other and is optional. In the opinion of the applicant, based on the explanation provided in the Notification as well as the clarification issued by the Hon'ble Ministry of Finance, the definition of the declared tariff will never ever include the charges of breakfast or airport pick up and drop as well as food bill. In this scenario, the liability of the applicant to pay GST on hotel accommodation i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... air condition etc. This leads one to the conclusion that in order to stay in the room the hotel provides refrigerator, bed, furniture and air condition which represent a basic infrastructure of the property. All other items such as extra bed, items placed in refrigerator, breakfast, etc. are optional services which the guest may or may not consume. The definition of declared tariff forms a genus of services which never ever includes anything other charges for infrastructure. More so, even the extra bed as clarified nowhere gets included in declared tariff. In view of these, the applicant is fortified in its opinion that the 18% GST will apply on room stay plus service charge and not 28% GST. Opinion in relation to query 4: As demonstrated in illustration 2, the tariff of the applicant falls below Rs. 7500/- and hence, in the humble opinion of the applicant the applicable rate of GST on breakfast, food bill as well as restaurant services would be 5% GST in view of the Notification no. 46/2017- CGST (Rate). Opinion in relation to query 5: The applicant states its business is a seasonal business. Like stock markets, the price fluctuates of rooms. It may happen that the base tarif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is offered as inclusion and invoice would reflect two charges. Based on the tariff slab, liability to pay GST on room stay will be 12%. An illustration would better explain the query of applicant. Illustration 4:- Invoice for low category rooms: Sr.No. Particulars Amount (Rs.) Remarks 1 Room Stay Plus Service Charge 2,400 2 Breakfast 1,000 Optional additional Service 3 Heritage Walk 800 Optional additional Service 4 Airport Pick up and drop 1,000 Optional additional Service Total 5,200 Also Heritage Walk and pick-up drop facility being additional services not connected with tariff would attract 18% G.S.T. However, as the applicant charges 5% GST on restaurant services and the applicant shows a separate item as charges for breakfast it must be ordered to be liable to pay 5% GST on breakfast and not 12% GST. 4. Statement of facts of the case submitted by applicant vide Annexure to Form GSTR ARA-01: 1. The applicant runs a boutique hotel as well as restaurant. 2. The applicant charges tariff for room stay from the customers based on the seasons. 3. The applicant is charging 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority. 7. We find that the Applicant runs a boutique hotel as well as restaurant. The restaurant of the applicant is situated in the hotel's premises. The applicant charges tariff for room stay from the customers based on the seasons. The invoice raised depicting money charged from the customer of the applicant comprise of the following:- * Room stay * Service charge * Breakfast * Airport pickup and drop * Extra Bed * Laundry services * Lunch/Dinner * Heritage Walk. 8. We further find that their declared tariff represents only the charges for room stay plus service charges. The services of breakfast, airport pick up & drop, extra bed, laundry, lunch/dinner and heritage walk are optional and one may or may not choose to avail these other amenities/additional services. Accordingly, the Applicant collects separate prices for each service availed by the guest in the invoice issued by them, upon check out from the hotel. Hence, these services cannot be said to be naturally bundled and there is no composite supply. Each service is unique, different, not inter dependent on each other and is optional. The Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; (ii) Accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of a unit of accommodation of one thousand rupees and above but less than two thousand five hundred rupees per unit per day or equivalent. Explanation.- "declared tariff" includes charges for all 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. 6 - (iii) Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink, where such supply or service is for cash, deferred payment or other valuable consideration, 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, located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied, other than those located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent shall attract central tax @ 2.5% without any input tax credit under item (i) above and shall not be levied at the rate as specified under this entry. 9 - 10. We also find that the Government of India, Ministry of Finance, Department of Revenue (Tax Research Unit), vide Circular No. 27/01/2018GST dated 04.01.2018 (Issued from F. No. 354/107/2017-TRU), has issued clarifications on certain issues regarding levy of GST on supply of services. Relevant extract of the same is reproduced herein below: Sr.No. Questions/Clarifications Sought Clarifications 1 1. Will GST be charged on actual tariff or declared tariff for accommodation services? 1. Declared or published tariff is relevant only for determination of the tax rate slab. GST will be payable on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Credit allowed]. 3. Declared Room Tariff from Rs. 2500/- up to Rs. 7499/-: GST @ 18% [ITC Credit allowed]. 4. Declared Room Tariff from Rs. 7500/- and above : GST @ 28% [ITC Credit allowed]. 'Supply of food and beverage services by restaurants in hotel premises': 12. From the above, we also find that GST Rate for 'Supply of food and beverage services by restaurants in hotel premises' would also be determined according to declared tariff for the room, and GST at the rate so determined would be levied on the amount separately charged, for services of breakfast, lunch & dinner, from the guest/customer. The HSC code (Tariff Group/ Heading) for the 'supply of food and beverage services by restaurants in hotel premises' shall be 996332. According to declared room tariff, the rate of GST for said services will be as under: 1. Restaurants in hotel premises having room tariff of less than Rs. 7500/- per unit per day will attract GST of 5% without ITC. 2. Restaurants in hotel premises having room tariff of Rs. 7500/- and above per unit per day (even for a single room) will attract GST of 18% with full ITC. 'Passenger transport services': 13. We further find that the Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be 999799. The rate of GST for above services will be 18% with ITC, as mentioned above. 15. In light of the above, we rule as under: R U L I N G Question-1: Whether the invoice of the applicant containing items reflecting charges towards room stay, service charge, breakfast, airport pick up and drop, extra bed form a part of tariff in order to ascertain the rate of GST as per the slabs provided under Notification No.11/2017- Central Tax (Rate) i.e. what will be the liability to pay GST i.e. to say that declared tariff represents only the charges for room stay plus service charge and the customer books only hotel accommodation and the rest optional facilities are procured after checking in at the hotel ? Answer: Declared or published tariff is relevant only for determination of the tax rate slab. GST Rate for the 'Supply of Accommodation, food and beverage services' would be determined according to declared tariff for the room, and GST at the rate so determined would be levied on the entire amount charged. The rate of GST for other distinguished service provided by M/s. Mangaldas Mehta and Co. Limited (GSTIN-24AAACM4217CIZ5) shall be determined according to the respecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n amount collected for services of laundry and heritage walk from guest under 'Other services n.e.c.'. The HSC code (Tariff Group/ Heading) for these services shall be 999799. Question-2: If the answer to query no. 1 results in liability to pay GST as in tariff being lesser than Rs. 7,500/-, whether the applicant will be liable to pay 5% GST on restaurant services to the guest who stays at hotel as well as to any outsider who comes just to eat at the restaurant and not 18% GST in terms of Notification no. 46/2017 CGST (Rate)? Answer: As mentioned above, declared or published room tariff is relevant only for determination of the tax rate slab. In case the Restaurant situated in a hotel premises having declared room tariff of less than Rs. 7500/- per unit per day, M/s Mangaldas Mehta and Co. Limited (GSTIN-24AAACM4217CIZ5) will be liable to pay GST @ 5% without ITC on restaurant services to the guest who stays at hotel as well as to any outsider who comes just to eat at the restaurant. If declared tariff of any unit of accommodation of Rs. 7500/- and above per unit per day or equivalent, applicant is liable to pay GST @18% on amount charged for restaurant services to the guest who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption or from the day the tariff exceeds Rs. 7,500 and it falls back to 5% as soon as the tariff falls below Rs. 7,500? Answer: In case different room tariff is declared for different seasons or periods of the year, the tariff declared for the season in which the service is provided shall apply. GST Rate would be determined according to declared tariff for the room, and GST at the rate so determined would be levied on the amount charged for restaurant services from the guest/customer. Question-6: The applicant has certain lower category of rooms wherein the tariff at which they are sold at includes break-fast. In this scenario, what will be the liability to pay GST on room tariff and breakfast in the event the applicant is liable to pay only 5% GST on restaurant services as tariff falls below Rs. 7,500 and low category rooms are sold at Rs. 3,400/-?. Answer: In case different tariff is declared for rooms, highest of such declared tariffs shall be the declared tariff for the purpose of levy of GST. If declared tariff of any unit of accommodation of Rs. 7500/- and above per unit per day or equivalent, M/s Mangaldas Mehta and Co. Limited (GSTIN24AAACM4217CIZ5) is liable to pay GST ..... X X X X Extracts X X X X X X X X Extracts X X X X
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