2020 (2) TMI 553 - AAR - GST

Rate of GST - restaurant services - Supply of goods or supply of services - Sr. No. 7, Notification No. 11/2017-CT(Rate) dated 28th June, 2017 - HELD THAT - The supplies of food and non-alcoholic beverages provided in a restaurant shall be classified as a supply of services and the provisions of the GST law shall apply to such supplies accordingly. As per Sr. No. 7(iii) of Notification No. 11/2017-CT(Rate) dated 28.06.2017, as amended, supply of food or drinks in a restaurant for consumption within the restaurant premises or away from the restaurant premises, where the restaurant is located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes with a tariff seven thousand five hundred rupees and above per unit/room per day or equivalent for any unit/room in the premises, the applicable rate of GST will be 18% - there are no hesitation in holding that the applicant restaurant is located in the same premises as JW Marriot Hotel having rooms with a tariff of seven thousand five hundred rupees and above, per unit/room per day or equivalent for any unit/room and applicant will be supplying food or drinks for consumption within the JW Marriot Hotel premises. The applicant must discharge its GST liability @ 18% (9% each of CGST and SGST) as per Sr.No. 7(iii) of Notification No. 11/2017-CT(Rate) dated 28.06.2017, as amended.

Summary

Issues:
Rate of tax applicable to the applicant providing restaurant services as per the facts of the case.

Analysis:
Issue 1 - Rate of Tax Applicable:
The applicant sought an advance ruling to determine the rate of tax applicable to their restaurant services. The applicant contended that their restaurant, situated in a retail arcade owned by a hotel, did not offer lodging services, and hence, should be taxed at 5% as per their interpretation of the relevant notifications. On the other hand, the jurisdictional officer argued that the restaurant was an integral part of the hotel premises and should be taxed at 18%. The Authority observed that the restaurant and the hotel shared common premises with inter-connectivity, indicating a close relationship. The applicant's restaurant primarily catered to the hotel clientele, which influenced the ruling. The Authority concluded that the applicant's restaurant fell under the 18% GST category as per Notification No. 11/2017-CT(Rate) due to its location within the hotel premises with a tariff exceeding ?7500 per unit/room per day.

Final Decision:
The Authority, after considering all submissions and observations, ruled that the rate of tax applicable to the applicant providing restaurant services in the given case is 18% GST (9% each of CGST and SGST).