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2020 (4) TMI 594 - AAR - GSTRate of GST - Interpretation of Statute - Restaurant services - Supply of Room or unit accommodation services by hotel - Supply of food and beverage services by restaurants in hotel premises - Notifications issued in relation to the rate of 5% GST on restaurant services - N/N. 46/2017- Central Tax (Rate) - Services of Airport pickup and drop to the guests/ customers - other services. Supply of Room or unit accommodation services by hotel - HELD 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 - 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 (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 supply of food and beverage services by restaurants in hotel premises shall be 996332 - Restaurants in hotel premises having room tariff of less than ₹ 7500/- per unit per day will attract GST of 5% without ITC - 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. Services of Airport pickup and drop to the guests/ customers - HELD THAT - The applicant supplies the services of Airport pickup and drop to the guests/ customers and charges amount separately for Airport pickup and drop services from gusts, which shall be taxable under Passenger transport services - The HSC code (Tariff Group/ Heading) for the supply of the Passenger transport services by hotel shall be 996412. This service accounting code includes 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. Other services - laundry services - heritage walk services - HELD THAT - These services nowhere else classified in GST Acts. The HSC code (Tariff Group/ Heading) for the supply of the Other services n.e.c. shall be 999799. The rate of GST for above services will be 18% with ITC. If there is 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 and not 18% GST in terms of Notification no. 46/2017 CGST (Rate)? - HELD THAT - In case the Restaurant situated in a hotel premises having declared room tariff of less than ₹ 7500/- per unit per day, M/s Mangaldas Mehta and Co. Limited will be liable to pay GST @ 5% without ITC on restaurant services to the guest who stays at hotel as well as to any outsider who comes just to eat at the restaurant. If declared tariff of any unit of accommodation of ₹ 7500/- and above per unit per day or equivalent, applicant is liable to pay GST @18% on amount charged for restaurant services to the guest who stays at hotel as well as to any outsider who comes just to eat at the restaurant. If the applicant is charging money towards room stay, breakfast, airport pick up and drop, as well as extra bed plus meals i.e. the package covers everything and 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 . 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? - HELD THAT - In case declared room tariff of less than ₹ 7500/- per unit per day, M/s Mangaldas Mehta and Co. Limited is liable to pay GST @ 5% without ITC on restaurant services provided to the guest who stays at hotel as well as to any outsider who comes just to eat at the restaurant. During the financial year, on account of low season, the tariff remains below ₹ 7,500/-. However in peak season, the room tariff exceed ₹ 7,500/-, then in this situation, whether the liability of the applicant to pay GST at 18% on restaurant arises from inception or from the day the tariff exceeds ₹ 7,500 and it falls back to 5% as soon as the tariff falls below ₹ 7,500 ? - HELD THAT - In case different room tariff is declared for different seasons or periods of the year, the tariff declared for the season in which the service is provided shall apply. GST Rate would be determined according to declared tariff for the room, and GST at the rate so determined would be levied on the amount charged for restaurant services from the guest/customer. The applicant has certain lower category of rooms wherein the tariff at which they are sold at includes break-fast. In this scenario, what will be the liability to pay GST on room tariff and breakfast in the event the applicant is liable to pay only 5% GST on restaurant services as tariff falls below ₹ 7,500 and low category rooms are sold at ₹ 3,400/-? - HELD THAT - In case different tariff is declared for rooms, highest of such declared tariffs shall be the declared tariff for the purpose of levy of GST. 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 including breakfast (i.e. ₹ 3400/-) from guest.
Issues Involved:
1. Determination of GST rate for various services offered by the hotel. 2. GST applicability on restaurant services based on room tariff. 3. GST liability on a package of services exceeding ?7,500. 4. GST rate on restaurant services when room tariff is below ?7,500. 5. GST rate fluctuation based on seasonal room tariff changes. 6. GST on lower category rooms including breakfast. Detailed Analysis: Issue 1: Determination of GST Rate for Various Services Offered by the Hotel The hotel provides multiple services such as room stay, service charge, breakfast, airport pick-up and drop, extra bed, laundry services, lunch/dinner, and heritage walk. The invoice reflects separate charges for each service. These services are not naturally bundled and do not constitute a composite supply. Therefore, GST rates for each service must be determined individually as per Notification No. 11/2017-Central Tax (Rate). Ruling: - Room Stay and Service Charge: GST rate is determined by the declared tariff: - Up to ?999: GST @ NIL - ?1,000 to ?2,499: GST @ 12% - ?2,500 to ?7,499: GST @ 18% - ?7,500 and above: GST @ 28% - Food and Beverage Services by Restaurants in Hotel Premises: - Room tariff less than ?7,500: GST @ 5% without ITC. - Room tariff ?7,500 and above: GST @ 18% with ITC. - Airport Pickup and Drop: Taxable under 'Passenger transport services' with GST @ 18%. - Laundry and Heritage Walk: Taxable under 'Other services n.e.c.' with GST @ 18%. Issue 2: GST Applicability on Restaurant Services Based on Room Tariff If the declared room tariff is less than ?7,500, the restaurant services provided to both hotel guests and outsiders will attract GST @ 5% without ITC. If the declared room tariff is ?7,500 or above, GST @ 18% with ITC applies. Ruling: - Room tariff less than ?7,500: GST @ 5% on restaurant services. - Room tariff ?7,500 and above: GST @ 18% on restaurant services. Issue 3: GST Liability on a Package of Services Exceeding ?7,500 If a package is offered to a guest covering multiple services and the sum total exceeds ?7,500, the declared tariff is used for determining the GST rate. Each service is taxed individually based on its nature. Ruling: - Room Stay and Service Charge: GST @ 28% if declared tariff is ?7,500 and above. - Restaurant Services (e.g., breakfast): GST @ 18%. - Airport Pickup and Drop: GST @ 18%. Issue 4: GST Rate on Restaurant Services When Room Tariff is Below ?7,500 If the declared room tariff is less than ?7,500, the restaurant services provided to both hotel guests and outsiders will attract GST @ 5% without ITC. Ruling: - Room tariff less than ?7,500: GST @ 5% on restaurant services. Issue 5: GST Rate Fluctuation Based on Seasonal Room Tariff Changes The GST rate for restaurant services is determined based on the declared tariff for the season in which the service is provided. If the room tariff exceeds ?7,500 during peak season, GST @ 18% applies to restaurant services. When the tariff falls below ?7,500, GST @ 5% applies. Ruling: - Peak Season (tariff exceeds ?7,500): GST @ 18% on restaurant services. - Low Season (tariff below ?7,500): GST @ 5% on restaurant services. Issue 6: GST on Lower Category Rooms Including Breakfast For lower category rooms sold at ?3,400 (including breakfast), the highest declared tariff is considered for GST purposes. If the declared tariff is ?7,500 and above, GST @ 28% applies to the room charge including breakfast. Ruling: - Room tariff ?3,400 (including breakfast): GST @ 28% if the highest declared tariff is ?7,500 and above. Conclusion The Advance Ruling Authority provided a comprehensive analysis of the GST applicability on various services offered by the hotel. Each service is taxed based on its nature and the declared room tariff, ensuring compliance with the GST Act and relevant notifications.
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