2019 (3) TMI 1474 - AAR - GST

Classification of supply - composite supply or not - Rate of GST - restaurant service offered along with the supply of food, services like valet parking, music, decoration and other such services associated with organizing social gatherings etc. - input tax credit for services other than the supply of food - bundling of services - Held that - Supply of food, by way of or as part of any service or in any other manner whatsoever, is a composite supply, which shall be treated as service in terms of Para 6(b) of Schedule II of the GST Act. It is classifiable under SAC 9963 and taxable under different clauses of Sl No. 7 of the Rate Notification. If food is supplied by way of or as part of the services associated with organizing social events at the club premises, together with renting of such premises, it will be taxable under Sl No. 7(vii) of the Rate Notification. Supply of any other goods in such an event will also be taxable under Sl No. 7(vii) of the Rate Notification - All other services offered by the Applicant, being services of a membership organization, are classifiable under SAC 9995 and taxable under Sl No. 33 of the Rate Notification. They include swimming and other facilities and services that are not bundled with the supply of food and charged separately, whether or not provided at the restaurant or at any other place. If the Applicant charges GST under Sl No. 7(i) of the Rate Notification on his supplies from the restaurant, he will not be able to claim a credit of input tax on such supplies - The Applicant should apply the provisions under section 17(2) (6) for apportionment of the input tax credit, treating supplies, if any, taxable under Sl No. 7(i) of the Rate Notification, as exempt supplies.

Summary

Issues:
Admissibility of the Application

Analysis:
The Applicant, a nonprofit company providing club amenities, sought an advance ruling on GST rates for services like restaurant offerings, valet parking, and event services. The Revenue officer contended that rate-related queries were not admissible under section 97(2) of the GST Act. However, the Authority found the questions admissible under section 97(2)(b) regarding the applicability of rate notifications. The Applicant's issues were not pending in any other proceedings, leading to the admission of the application.

Submissions of the Applicant

The Applicant detailed the GST rates they charge for various services, segregating input tax credit based on rules 42 and 43 of the GST Rules. The table provided the percentage rates for different services, including food supplies, event services, and club amenities.

Observation & Findings of the Authority

The Authority classified the Applicant's services into food supply and other services. Food supply, whether at the restaurant or events, falls under composite supply and specific clauses of the Rate Notification. The Applicant must follow specific tax rates based on the nature of supply. Other services, classified under SAC 9995, are taxable under a different clause of the Rate Notification. The ruling specified the treatment of input tax credit for supplies falling under specific clauses of the Rate Notification, emphasizing compliance with section 17(2) & (6) of the GST Act for credit apportionment.

Ruling

The Authority ruled on the classification and taxability of food supplies and other services provided by the Applicant. Food supply from the restaurant or events is classified under specific clauses of the Rate Notification. Other services are categorized differently, and the Applicant must adhere to input tax credit provisions for taxable supplies. The ruling's validity is subject to specified provisions until declared void under the GST Act.