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2021 (1) TMI 691 - AAR - GSTClassification of services - Outdoor catering services or not - catering of food, banquet facilities and combination of both (as per requirement of the customer) in self owned marriage and party halls by Hotel Jewels (having all rooms below ₹ 7,500/1, Kunjpura Road, Karnal (A unit of Jewel Classic Hotels Pvt Ltd) - N/N. 20/2019 Dated 30th September 2019 - Eligibility to charge 5 % tax (as per Notification No. 20/2019 Central Tax (Rate) for providing outdoor catering at Hazuri Bagh (A party lawn restaurant of M/s Jewel Classic Hotels Pvt. Ltd.) - treatment of pure agent services - additional arrangements (in addition to foods, beverages renting of premises) such as flower decoration, DJ, Dance Floor, Special cutlery, Electric/electronics items, arranging food/beverages of specific vendors, to be excluded from value of supply as given in Rule 33 of CGST Rules and thus no tax is required to be charge on them - levy of tax on the supplies arranged from these unregistered people to be paid by the applicant under the Reverse Charge mechanism - whether extra bed forms part of the room tariff and liable to be charged as per various rates as per slabs given under Notification No. 11/2017-Central Tax (Rate), No. 13/2018-Central Tax (Rate) Dated 26th July 2018 and 20/2019 -Central Tax (Rate) Dated 30th September 2019? Whether catering of food, banquet facilities and combination of both (as per requirement of the customer) in self owned marriage and party halls by Hotel Jewels (having all rooms below ₹ 7,500/1, Kunjpura Road, Karnal (A unit of Jewel Classic Hotels Pvt Ltd) is covered in Outdoor Catering taxable @ 5 % as per Notification No. 20/2019 Dated 30th September 2019? - HELD THAT - The hotel Jewels is the principal place of business and Noor Mahal is the additional place of business and both are owned by the same owner i.e. M/s Hotel Jewel Classic Pvt. Ltd. under the same registration number - There is a condition in column 3 of (i)(a)(iv) in the Notification No. 20/2019 Central Tax (Rate) dated 30.09.2019 amending the serial No. 7 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017, that the supply of outdoor catering should not be provided by such suppliers who are providing hotel accommodation at specified premises . In the present case, the applicant is providing hotel accommodation at Noor Mahal which is a specified premise. Thus, the applicant does not fulfill the condition - thus, outdoor catering activity carried by M/s Jewels Classic Hotels Pvt. Ltd, at its own Marriage Hall and Party Hall including outdoor lawns on the same registered premises of principal place or additional declared place does not fall in the ambit of GST (5%). Whether Hotel Jewels is eligible to charge 5 % tax (as per Notification No. 20/2019 Central Tax (Rate) for providing outdoor catering at Hazuri Bagh (A party lawn restaurant of M/s Jewel Classic Hotels Pvt. Ltd.)? - HELD THAT - As Hazuri Bagh is situated in precincts of Hotel Noor Mahal, so it the clear that the taxpayer is not satisfying the condition (i) mentioned above. Therefore, the taxpayer is not entitled to supply @ 5% from the business premises of Hotel Noor Mahal/Hazuri Bagh. Whether the additional arrangements (in addition to foods, beverages renting of premises) such as flower decoration, DJ, Dance Floor, Special cutlery, Electric/electronics items, arranging food/beverages of specific vendors, provided as pure agent will be excluded from value of supply as given in Rule 33 of CGST Rules and thus no tax is required to be charge on them? - HELD THAT - As per valuation rule provision of GST Act, 2017, the taxpayer does not satisfy the condition of the pure agent which is to recover from recipient only such amount as has been paid by him to the third party. Facilitation charges collected shall disqualify taxpayer from being pure agent. Further, to arrange these supplies, some supplies are procured from Unregistered Persons having no GST Registration. Whether there is any tax on the supplies arranged from these unregistered people to be paid by the applicant under the Reverse Charge mechanism or any other provisions of the HGST Act/CGST Act? - HELD THAT - The provisions of Section 9 (4) of the CGST Act are not applicable to all registered persons, goods and services. It is applicable only to selected categories of registered persons goods and services which have to be notified by the government - the N/N. 07/2019-Central Tax (Rate) dated 29.03.2019 and N/N. 24/2019-Central Tax (Rate) dated 30.09.2019, it is clear that presently reverse charge mechanism under section 9(4) is not applicable on the applicant. Whether the extra bed forms part of the room tariff and liable to be charged as per various rates prescribed as per slabs given under Notification No. 11/2017-Central Tax (Rate), No. 13/2018-Central Tax (Rate) Dated 26th July 2018 and 20/2019 -Central Tax (Rate) Dated 30th September 2019? - HELD THAT - The charges of extra bedding if exceeds the room tariff as per the N/N. 20/2019-Central Tax (Rate) dated 30th September 2019 amending Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017, the same shall be treated as gross value of supply and the tax shall be charged as per the amount including the extra bedding charges as it is a part of room tariff.
Issues Involved:
1. Taxability of catering and banquet facilities in self-owned halls. 2. Eligibility to charge 5% tax for outdoor catering at Hazuri Bagh. 3. Exclusion of additional arrangements from the value of supply as a 'pure agent'. 4. Tax liability on supplies from unregistered persons under the Reverse Charge Mechanism. 5. Inclusion of extra bed charges in the room tariff for GST purposes. Detailed Analysis: Issue 1: Taxability of catering and banquet facilities in self-owned halls The applicant contended that Hotel Jewels should be eligible for a 5% GST rate for catering and banquet facilities provided in its own marriage and party halls, arguing that these services fall under the definition of 'outdoor catering'. However, the judgment clarified that Hotel Jewels and Noor Mahal are not distinct entities but part of the same business under one GST registration. Since Hotel Noor Mahal provides hotel accommodation at specified premises (rooms with tariffs above ?7,500), the applicant does not meet the conditions for the 5% GST rate on outdoor catering as per Notification No. 20/2019. Therefore, catering and banquet facilities in self-owned halls are not covered under the 5% tax rate. Issue 2: Eligibility to charge 5% tax for outdoor catering at Hazuri Bagh The applicant argued that Hotel Jewels should charge 5% GST for outdoor catering at Hazuri Bagh, as it does not qualify as specified premises. However, the judgment noted that Hazuri Bagh is situated within the business premises of Noor Mahal, which is a specified premise. Thus, the applicant does not satisfy the required conditions for the 5% GST rate on outdoor catering. Consequently, Hotel Jewels is not eligible to charge 5% tax for outdoor catering at Hazuri Bagh. Issue 3: Exclusion of additional arrangements from the value of supply as a 'pure agent' The applicant claimed to act as a 'pure agent' for additional arrangements such as flower decoration, DJ, and special cutlery, intending to exclude these from the value of supply under Rule 33 of the CGST Rules. However, the judgment found that the applicant does not satisfy the conditions of a 'pure agent' because they collect facilitation charges, which disqualifies them from this status. Therefore, these additional arrangements cannot be excluded from the value of supply, and tax must be charged on them. Issue 4: Tax liability on supplies from unregistered persons under the Reverse Charge Mechanism The applicant inquired about the tax liability on supplies arranged from unregistered persons. The judgment clarified that as per the amended Section 9(4) of the CGST Act, the reverse charge mechanism is applicable only to specified categories of registered persons and goods/services, which must be notified by the government. As of the judgment date, no such notification applies to the applicant. Thus, the applicant is not required to pay tax under the Reverse Charge Mechanism for supplies from unregistered persons until further notification. Issue 5: Inclusion of extra bed charges in the room tariff for GST purposes The judgment addressed whether extra bed charges should be included in the room tariff. It referred to various notifications and clarified that the value of supply, including extra bedding charges, determines the applicable GST rate. Therefore, extra bed charges form part of the room tariff and are liable to be charged GST accordingly, based on the total value of supply. Ruling: i) Catering of food, banquet facilities, and their combination in self-owned marriage and party halls by M/s Hotel Jewels Classic Pvt. Ltd. is not covered under the 5% tax rate for outdoor catering. ii) M/s Hotel Jewels Classic Pvt. Ltd. is not eligible to charge 5% tax for providing outdoor catering at Hazuri Bagh. iii) Additional arrangements provided by the applicant do not qualify for exclusion from the value of supply as a 'pure agent', and tax must be charged on them. iv) The applicant is not required to pay tax on supplies from unregistered persons under the Reverse Charge Mechanism until further notification. v) Extra bed charges form part of the room tariff and are liable to be charged GST accordingly.
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