2020 (1) TMI 1092 - AAR - GST

Classification of supply - supply of goods or supply of services - supply of food items at GMUs (General Minor Units) at Railway Platforms which include only counter sale of packed food items, drinks and cooked item - input tax credit - Serial No. 7(ia) of Notification No. 11/2017-C.T. (Rate), dated 28-6-2017 - GST paid on license fees to Indian Railway or IRCTC. Whether supply of food items at GMUs (General Minor Units) at Railway Platforms which include only counter sale of packed food items, drinks and cooked item shall be treated as Sale of Goods or Sale of Services ? - HELD THAT - It is evident that the supply made/to be made by the taxpayer as detailed in their application for advance ruling, falls under Chapter Heading 9963 (Accommodation, Food and Beverage Services) with the description of Service mentioned at Sl. No. 7(ia) of the table, Supply, of goods, being food or any other article for human consumption or any drink, by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd., or their licensees, whether in trains or at platforms. as a service. From the above notifications it is evident that the activity carried out by the applicant is supply of services . If it is sale of services, whether the whole revenue shall be taxed @ 5% without ITC under Serial No. 7(ia) of Notification No. 11/2017-C.T. (Rate), dated 28-6-2017 or assessee can opt to pay tax @ 18% with ITC under Serial No. 7(ix) of that Notification? - HELD THAT - Letter F. No. 354/03/2018-TRU, dated 31-3-2018 of the OSD (TRU), Ministry of Finance, Department of Revenue (Central Board of Excise and Customs) (Tax Research Unit) needs to be taken into consideration which clarifies the issue holding that with the approval of GST Implementation Committee, that the GST rate on supply of food and/or drinks by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd. or their licensees, whether in trains or at platforms (static units), will be 5% without ITC - thus, it is clear that the services will be taxed @ 5% without ITC. If the assessee pays the taxes @ 5% under Serial No. 7(ia), whether assessee can claim the Input Tax Credit (ITC) of GST paid on license fees to Indian Railway or IRCTC? - HELD THAT - Input Tax Credit of tax paid or deemed to have been paid appears not to be admissible. Consequences for wrong availing of ITC - HELD THAT - This part of the question is out of the purview of the mandate of the Advance Ruling u/ s 95 (a) which provides that advance ruling means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of Section 97 or sub-section (1) of Section 100, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.

Summary

Issues involved:
1. Determination of whether the supply of food items at General Minor Units (GMUs) at railway platforms constitutes "Sale of Goods" or "Sale of Services."
2. Clarification on the applicable tax rate and Input Tax Credit (ITC) eligibility for the revenue generated from the mentioned supplies.
3. Assessment of the ability to claim Input Tax Credit (ITC) on GST paid for license fees to Indian Railway or IRCTC.
4. Evaluation of the consequences of wrongly availing Input Tax Credit (ITC).

Issue 1:
The Authority analyzed whether the supply of food items at GMUs should be classified as "Sale of Goods" or "Sale of Services." The applicant's submission indicated that the activities at GMUs were akin to the sale of goods, not services, as no additional services beyond selling food items were provided. However, based on relevant notifications, the Authority concluded that the supply made by the applicant fell under the category of services, specifically under Chapter Heading 9963. Therefore, the activity was deemed to be a "supply of services."

Issue 2:
Regarding the tax rate and Input Tax Credit (ITC) eligibility, the applicant inquired whether they could opt for taxation at 18% with ITC or 5% without ITC under specific notifications. Referring to a clarification from the Ministry of Finance, the Authority determined that the services would be taxed at 5% without ITC, ensuring uniformity in the GST rate for food and drinks supplied at railway platforms.

Issue 3:
The applicant sought clarity on claiming Input Tax Credit (ITC) on GST paid for license fees to Indian Railway or IRCTC if taxed at 5% under a specific notification. The Authority explained that the conditions specified in the notifications implied that Input Tax Credit of tax paid or deemed to have been paid might not be admissible in this scenario.

Issue 4:
The final issue pertained to the consequences of incorrectly availing Input Tax Credit (ITC), which was deemed beyond the scope of the Advance Ruling mandate as per the relevant provisions. Therefore, the Authority did not provide a ruling on this particular aspect.

In conclusion, the Authority ruled that the supply of food items at GMUs constitutes a "Supply of Services," subject to taxation at 5% without Input Tax Credit (ITC). Additionally, the applicant was not permitted to claim Input Tax Credit on GST paid for license fees to Indian Railway or IRCTC. The ruling clarified the applicable tax treatment and ITC eligibility for the specified activities, addressing the key concerns raised by the applicant within the legal framework.