TMI Blog2020 (4) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... 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: (a). Declared Room Tariff up to ₹ 999/- : GST @ NIL [Remark No ITC Credit]. (b). Declared Room Tariff from ₹ 1000/- up to ₹ 2499/-: GST @ 12% [ITC Credit allowed]. (c). Declared Room Tariff from ₹ 2500/- up to ₹ 7499/-: GST @ 18% [ITC Credit allowed]. (d). Declared Room Tariff from ₹ 7500/- and above: GST @ 28% [ITC Credit allowed]. GST Rate for Supply of food and beverage services by restaurants in hotel premises - HELD 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 7,500/-, what would be the liability of GST i.e. the price offered to customer represents a package offering a bouquet of services? - HELD THAT:- Declared or published room tariff is relevant only for determination of the tax rate slab in respect of the Supply of Accommodation, food and beverage services'. If declared tariff of any unit of accommodation of ₹ 7500/- and above per unit per day or equivalent, M/s Mangaldas Mehta and Co. Limited is liable to pay GST @28% on amount charged for room stay, extra bed (including service charges) from guest under service category of Supply of Room or unit accommodation services by hotels'. Further, the Applicant is liable to pay GST @18% on amount charged for restaurant services i.e. for breakfast to the guest under category of restaurant services . Further, the Applicant is liable to pay GST @ 18% with ITC on airport pickup and drop charges collected from guest under Passenger transport services . Whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017 [herein after referred to as the CGST Act and GGST Act ] by M/s. Mangaldas Mehta and Co. Limited, House of MG, Opp. Siddi Saiyed Jali, Lal Darwaja, Ahmedabad, Gujarat-380001, the applicant, seeking an advance ruling in respect of the following question: (i) 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 ? (ii) If the answer to query no. 1 results in liability to pay GST as in tariff being lesser than ₹ 7,500/-, whether the applicant will be liable to pay 5% GST on restaurant services to the guest who st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 5% GST on restaurant are ambiguously worded. Before entering the labyrinth of queries, the applicant would like to refer to certain definitions provided under GST Act, clarifications issued and certain relevant parts of Notification. What does Notification 46/2017- CGST (Rate) say ? The text of the Notification No.46/2017- CGST (Rate) reads thus: Description Rate Condition (i) 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 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, 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 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. ; Certain definitions:- Definition of declared tariff: Under the GST Act, declared tariff for hotel accommodation is defined in Notification 46/2017 CGST(Rate) which reads as follows:- 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. Definition of Composite supply: Section 2(30) defines Composite Supply and it reads as follows:- (30) composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lared tariff at the time of supply would apply. 6. GST at what rate would be levied if an upgrade is provided to the customer at a lower rate? 6. If declared tariff of the accommodation provided by way of upgrade is ₹ 10000, but amount charged is ₹ 7000, then GST would be levied @ 28% on ₹ 7000/-. The applicant humbly urges that in its opinion, the ambiguous notification and the clarification issued collectively enable the applicant to opt for rate of 5% GST for its restaurant business. The query-wise views of the appellant are stated below:- Opinion in relation to query 1: The applicant has offered the room by declaring the tariff which represents charges only towards hotel accommodation plus service charge. At the time of booking of room, the proposed customer/guest requests for an airport pick up and drop facility and also requests to add breakfast. Furthermore, when the guest comes to stay, the guest also eats meals at the restaurant of the applicant. In order to better understand the applicant presents an illustration as demonstrated below: Illustration 1: The break-u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f booking. The applicant gives a consolidated single figure to the proposed guest and also accepts money accordingly. However, when the applicant prepares an invoice upon check out from the hotel, the invoice would reveal separate prices for each service requested by the guest at the time of booking. An illustration would better clarify the situation. Illustration 2: Single amount quoted to guest but invoice reflects specific items of services and money attributable to each such service: Sr.No Particulars Amount (Rs.) [excl.GST] Remarks A Amount quoted to proposed guest at the time of making a reservation for double occupancy. 14,000 Single price quoted includes charges for 1 night stay at hotel, breakfast, lunch, dinner, heritage walk, extra bed, and airport pick up and drop B Invoice made at check out and contains following break up a) Room stay plus service charge 7,400 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eds ₹ 7,500/- for a few days during the year. The applicant states that the room tariff during the entire year however below ₹ 7500/- and it is only for a rare few days that the tariff shoots up. In order to better explain, the applicant presents a tabular illustration as below: Illustration 3: Tariff fluctuations and entangled rates: Period Tariff for rooms Season 1st April to 30th Sept Below ₹ 7500 Low season 1st October to 31 st Jan Above ₹ 7500 High Season 1st Feb to 31st March Below ₹ 7500 Low season As per the Notification No. 46/2017 CGST (Rate), when the tariff of the hotel is in excess of ₹ 7500/-, the liability to pay GST on restaurant arises at 18% and in other cases, it is 5% GST. The Notification is absolutely silent on the liability of GST in the event the tariff remains below ₹ 7500/- for a part of the year and exceeds ₹ 7,500/- during the year m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 18% GST on restaurant services. 4. The applicant charges rate of GST on room stay as per the slabs provided on declared tariff. 5. 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 6. In many cases, the sum total of the items stated in point no. 5 exceeds ₹ 7500/-. 7. As i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 amended provides different rates for different types of services. The rate of GST for each distinguished service provided by the Applicant shall be determined according to the respective entries of said Notification. Accommodation, food and beverage services : 9. We find that the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended issued under the Central Goods and Services Tax Act, 2017 (herein afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 lodging purposes hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation .- For the removal of doubt, it is hereby clarified that, 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 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, 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-T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Room or unit accommodation services by hotel: 11. From the above, it clearly reveals that GST Rate for the Supply of Room or unit accommodation services by hotels' 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, for room stay plus service charges and extra bed, from the guest/customer. The HSC code (Tariff Group/ Heading) for the supply of Room or unit accommodation services by hotel shall be 996311. According to declared room tariff, the rate of GST for said services will be as under: 1. Declared Room Tariff up to ₹ 999/- : GST @ NIL [Remark No ITC Credit]. 2. Declared Room Tariff from ₹ 1000/- up to ₹ 2499/-: GST @ 12% [ITC Credit allowed]. 3. Declared Room Tariff from ₹ 2500/- up to ₹ 7499/-: GST @ 18% [ITC Credit allowed]. 4. Declared Room Tariff from ₹ 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 al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Passenger transport services by motorized taxi within or between urban and suburban areas. The rate of GST for these services will be 18% with ITC, as mentioned above. Other Services : 14. We further find that the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, as amended and Notification No. 11/2017-State Tax (Rate) dated 30.06.2017, as amended also provides rate of GST for Other services of Heading 9997. The part of the Sr. No. 35 of the Notification No.11/2017Central Tax (Rate) dated 28.06.2017, as amended, relevant for examining the present issue, is as follows: Sl. No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition (1) (2) (3) (4) (5) 35 Heading 9997 Other services (washing, cleaning and dyeing services; beauty and physical well-being services; and other miscellaneous services including services nowhere else classified). 9 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3. Declared Room Tariff from ₹ 2500/- up to ₹ 7499/-: GST @ 18% [ITC Credit allowed]. 4. Declared Room Tariff from ₹ 7500/- and above: GST @ 28% [ITC Credit allowed]. (b) 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: (i) Restaurants in hotel premises having room tariff of less than ₹ 7500/- per unit per day will attract GST of 5% without ITC. (ii) Restaurants in hotel premises having room tariff of ₹ 7500/- and above per unit per day (even for a single room) will attract GST of 18% with full ITC. (c) The supplies of the services of Airport pickup and drop shall be taxable under Passenger transport services . The Applicant is liable to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices'. If declared tariff of any unit of accommodation of ₹ 7500/- and above per unit per day or equivalent, M/s Mangaldas Mehta and Co. Limited (GSTIN-24AAACM4217CIZ5) is liable to pay GST @ 28% on amount charged for room stay, extra bed (including service charges) from guest under service category of Supply of Room or unit accommodation services by hotels'. Further, the Applicant is liable to pay GST @18% on amount charged for restaurant services i.e. for breakfast to the guest under category of restaurant services . Further, the Applicant is liable to pay GST @ 18% with ITC on airport pickup and drop charges collected from guest under Passenger transport services . Question-4: If the answer to query no. 3 results in liability to pay GST as in tariff being lesser than ₹ 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 in terms of Notification no. 46/2017 CGST (Rate) and not 18% GST? Answer : In case declared room tariff of less than ₹ 7500/- per unit per day, M/s Mangaldas Mehta and Co. Limited (GSTIN ..... X X X X Extracts X X X X X X X X Extracts X X X X
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