TMI Blog2020 (10) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... amendments, it is seen that supply of soft beverages/aerated water, whether in person or room service, by the restaurant located in the premises of the hotel is taxable to GST at the rate of 18%. In the instant case, supply of tobacco products by the restaurant is not a composite supply but involves supply of two individual supplies of goods (tobacco products) and supply of services of serving by the restaurant. Such a supply is a mixed supply - In the instant case, the applicable rate of tax for cigarettes classifiable as CTH 2402 is 14% CGST and 14% SGST as per Sl.no 14 of Schedule IV of Notification No. 1/2017-C.T. (Rate) dated 28.06.2017 and Notification No. II (2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended. Apart from this GST Compensation Cess is applicable at specified rates for different kinds of cigarette product as per Notification No.1/2017-Compensation Cess (Rate) DT 28.6.2017 as amended. Hence, in the case of the mixed supply of cigarettes by the restaurant, in person or room service, the applicable rate is the rate applicable to supply of cigarettes which 14% CGST and 14% SGST as per Sl.no 14 of Schedule IV of Notification No. 1/2017-C.T.( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions MFAR HOTELS RESORTS PRIVATE LIMITED, 154/6, Velachery Main Road, Velachery, Chennai-600042. (hereinafter referred to as Applicant ) is registered under the GST Act 2017 vide GSTIN No. 33AABCM9267F1ZF. The Applicant owns and manages hotel and resorts. The applicant has preferred an application seeking Advance Ruling on the following questions: 1. What is the rate of tax applicable on the supply of Soft Beverages (Aerated Water) and Tobacco (Smokes) when these items are supplied independently and not as composite supply in the restaurant? In other words what is the rate of GST if these items alone are supplied and not along with food as Composite supply to the guest? 2. Whether supply of liquor is deemed to be the exempt supply under GST Act as per Section 2 (47) of CGST Act for the purpose of proportionate reversal of ITC as per Rule 42 of CGST rules 2017? 3. It is obligatory on the part of employer to supply free food to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey have also stated that they are not maintaining a separate account for purchase of food items for canteen purposes and a single account is being maintained both for restaurant and canteen. The ITC on the inward supply of food items is taken by the applicant. 2.5 In view of the above facts, the applicant has sought the authority of Advance Ruling on the questions raised in Para 1 supra. 3.1 The applicant was given an opportunity to be personally heard on 30.08.2019. The applicant appeared before the authority for Advance Ruling and stated that they supply soft beverages, filter cigarettes exceeding 75mm (HSN 2402 2090) in restaurant and in room service. This is mentioned in their menu for restaurant/bar room service. They stated that they will submit copies of menu and sample bills for each. They stated that they are charging 28% +cess whereas the clients demand to tax @18%. They are charging @18% on other room restaurant service. In respect of the 2 nd and 3 rd question they stated that they wish to rephrase the question regarding taxability of liquor and Supply of free food to employees. They stated that they will submit copies of menu, invoices for restaurant/bar and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd written submissions of the applicant. We find that the applicant has stated that they are a 5 star hotel offering variety of services such as rooms and suites, banquets, dining, spa, etc. They supply soft beverages (Aerated water), Tobacco (smoke) on certain occasions and not as composite supply. They supply Non-GST item liquor to guest in the restaurant. They supply free food to employees as per the terms of the contract with the employees. The applicant in their application has sought ruling on the following questions: 1. What is the rate of tax applicable on the supply of Soft Beverages (Aerated Water) and Tobacco (Smokes) when these items are supplied independently and not as composite supply in the restaurant? In other words what is the rate of GST if these items alone are supplied and not along with food as Composite supply to the guest? 2. Whether supply of liquor is deemed to be the exempt supply under GST Act as per Section 2 (47) of CGST Act for the purpose of proportionate reversal of ITC as per Rule 42 of CGST rules 2017? 3. It is obligatory on the part of employer to supply free food to the employees. Whether such free supply of food is liable to rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taurant along with supply of food/as a separate item and not as part of food in the buffet and bills these items separately in the bill from the restaurant. The menu is common for room service restaurant. The applicant claim that supply of Soft Beverages and/or Cigarette alone in the restaurant is not a composite supply and that they are billing such supply (t) 28% GST applicable compensation cess. 6.3 Supply is defined under Section 7 of the CGST Act 2017 and the same is reproduced below for reference: 7. (1) For the purposes of this Act, the expression supply includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; and (c) the activities specified in Schedule I, made or agreed to be made without a consideration; (1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the items along with the use of the facilities/ staff of the restaurant. These two are naturally bundled and supplied in conjunction each other and hence is a composite supply as per Section 2(30) of the Act. 6.4.2 Further, as per para. 6 (b) of Schedule II to the CGST /TNGST Act, the composite supply of goods being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration is a Supply of Service. In this instance, supply of soft beverages/aerated waters being drinks (other than alcoholic liquor for human consumption) and articles for human consumption in as a part of any service is a composite supply of service. The payment in this case can be immediate or billed to the room for residents. The relevant Explanatory notes for the Classification of Services states: 99633 Food, edible preparations, alcoholic non-alcoholic beverages serving services 996331 Services provided by Restaurants, Cafes and similar eating facilities including takeaway services, Room services and door delivery of food. 996332 Services provided by H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otels, 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. 9 The said entry has been amended vide Notification No. 20/2019-C.T.(Ratel dated 30th September 2019 as follows: S.No. Chapter, Section, Heading or Group Service Code (Tariff) Rate (percent) Condition (1) (2) (3) (4) (5) 7 Heading 9963 (Accommodation, food and beverage services) (vi) Accommodation, food and beverage services other than (i) to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho comes to the restaurant can have cigarettes alone also as these are in the menu of the restaurant. When a guest (resident or nonresident) comes to the restaurant and orders from the menu tobacco products, it involves supply of goods (cigarettes) and supply of services by the restaurant. In this case both the supplies are taxable. The serving of any items by a restaurant involves the supply of the items along with the use of the facilities/ staff of the restaurant. However, in this case the sale of cigarettes products are not naturally bundled together with the restaurant services as the services of the restaurant involves serving of food and beverages alone in the normal course. Hence is not a composite supply as per Section 2 (30) of the Act. However, when such cigarettes products are supplied by the restaurant, a single price is charged as seen in the invoices submitted by the applicant. Section 2(74) of CGST/TNGST ACT states: (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. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncil and collected in such manner as may be prescribed and shall be paid by the taxable person. Section 2(78) of CGST/TNGST ACT states: (78) non-taxable supply means a supply of goods or services or both which is not leviable to tax under this Act or under the Integrated Goods and Services Tax Act; Thus, as per Section 9(1) of CGST/TNGST Act, the supply of alcoholic liquor for human consumption, is a non-taxable supply. Hence, supply of alcoholic liquor for human consumption by a restaurant will not be taxable under CGST/TNGST Act. 8.1 In respect of Q.No.3, the applicant on rephrasing the original question has sought clarification on the taxability of supply of free food to employees . It is stated that in respect of employees, there is a separate canteen Caf 154 and supply of free food to employees is as per the contract with the employees. The applicant has furnished a copy of appointment letter issued to Ms. Namitha T Ajai dated 21,t January 2019. On perusal, it is seen that as per Sl.No. 17 of the Annexure-II to the said letter, it is stated that Duty Meals will be provided in Caf @154-Associate Dining Room .. From the said document, it is evident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 28 of CGST Rules, 2017. The rate applicable is CGST @ of 9% as per sl.No. 7 of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 and SGST @ 9% as per Notification No. as per Sl.No. 7 of Notification No. II (2)/ CTR/ 532 (d-14)/2017 vide G.O. (Ms) No. 72 dated 29.06.2017 as amended. 9. In view of the above, we rule as under RULING 1. The supply of soft beverages/aerated water, whether in person or room service, by the restaurant located in the premises of the hotel of the applicant is taxable to CGST at the rate of 9% as per sl.No. 7 of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 and SGST @ 9% as per Notification No. as per SI.No. 7 of Notification No. II (2)/ CTR/ 532 (d-14)/2017 vide G.O. (Ms) No. 72 dated 29.06.2017 as amended. 2. The supply of cigarettes by the restaurant, in person or room service, is taxable at 14% CGST and 14% SGST as per Sl.no 14 of Schedule IV of Notification No. 1/ 2017- C.T. (Rate) dated 28.06.2017 and Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended along with the applicable GST Compensation Cess at specified rates for different kinds of cigarette products as per Notification No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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