2021 (3) TMI 143 - AAR - GST

Classification of goods - rate of GST - supply of food inside the restaurant (branch) situated in zoological garden - HELD THAT - The applicant, as admitted, is already registered under GST, providing accommodation, food beverage services, falling under SAC 9963 and is discharging GST @ 18% on the said services, in terms of entry number 7 (vi) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended - The authorised representative during the personal hearing expressed that they intend to obtain separate registration for the impugned services at the Zoo premises, as the said service is a different vertical of business, in which case the impugned services are covered under 'Restaurant Service other than at specified premises', under SAC 9963 and is exigible to GST @ 2.5%, in terms of entry number 7 (ii) of the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, as amended; subject to condition that credit of input tax charged on goods and services used in supplying the service has not been taken tax and also subject to explanation (iv). Alternately, if the applicant intends to amend the existing registration to include the premises at Zoological garden, Mysuru, then two options are available to the applicant, which are as under (i) The applicant need to maintain separate accounts for the individual premises or (ii) The applicant need to reverse the input tax credit in terms of Rule 42 43 of CGST Rules 2017, in case they maintain common account for both the premises and avail the input tax credit. Even in both the above cases, the applicant has to pay GST @ 5%, on the supplies made at the impugned premises at Zoological garden, Mysuru.

Summary

Issues:
- Determination of the applicable GST rate for the supply of food inside a restaurant situated in a zoological garden.
- Interpretation of the GST provisions regarding separate registration or maintaining separate accounts for the business premises.

Analysis:
1. Admissibility of the Application:
- The applicant sought an advance ruling under Section 97 of the CGST Act 2017 regarding the liability to pay tax on "Restaurant services" as per Section 97(2)(e). The application was admitted for consideration.

2. Brief Facts of the Case:
- The applicant, a registered private limited company, provides accommodation, food, and beverage services at its business premises. They entered into a contract with a government body to open a stand-alone restaurant in a zoological garden, away from their current business location.
- The applicant pays rent for the restaurant premises at the zoological garden and does not use their existing registered premises for this new venture.

3. Applicant's Interpretation of Law:
- The applicant believed that the applicable GST rate for the supply of food in the zoological garden restaurant should be 5% without availing input tax credit.

4. Findings & Discussion:
- The Authority considered the submissions and noted that the applicant is already registered under GST for providing services at their current business location. The applicant expressed intent to obtain separate registration for the new restaurant or maintain separate accounts.
- The applicable GST rate for the new restaurant was determined to be 5% (CGST-2.5% & KGST-2.5%) under specific provisions, subject to conditions related to input tax credit utilization.

5. Ruling:
- The Authority ruled that the GST rate for the supply of food inside the zoological garden restaurant is 5% (CGST-2.5% & KGST-2.5%) if separate registration is obtained or separate accounts are maintained. In case of a common account, the applicant needs to pay GST at 5% and reverse input tax credit as per the relevant provisions.

This judgment clarifies the GST implications for a new restaurant venture in a zoological garden, outlining the options available to the applicant regarding registration and tax treatment based on their business structure and accounting practices.