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TMI Blog2018 (5) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... ATFORM (WITHOUT A/C) a. In these places, food and beverages (packed/MRP/cooked) are supplied to the passengers/general public at the rates fixed by Indian Railways/IRCTC. Food plaza has space for the consumer to consume the said items on premises, if he so wish. Food stalls also has a small counter offering the consumers to use the same and consume the food. Else, the consumer may take away the same and consume as per his wish. (B) SUPPLY OF FOOD ON BOARD THE RAJDHANI TRAINS a. In the Rajdhani trains, menu for the purpose of supplying food items/beverages is fixed by IRCTC, with respect to each class of travel preferred by the passengers. The Bid Document for services in such trains specifically provides tariff for meals supplied. The above-mentioned document also provides defined "MENU" as per which, meals are supplied to passengers. Food is supplied and served to the passengers and money for the same charged from the Indian Railways/IRCTC by the Applicant. b. Further, in some cases, IRCTC supplies some items of dinner/lunch menu from its own base kitchens/approved sources, to be picked-up by the representative of the Applicant. The Applicant charges money for the same fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Tax (Rate) dated 14.11.2017, supply of any food article/beverage in any manner, whatsoever, for consumption on or away from the premises is taxable at the rate of 2.5%. In this case, food is supplied by waiters on premises of a running train. Thus, the supply of food falls under the above said category and is taxable under CGST @ 2.5 % and Delhi GST @ 2.5 %. IGST, wherever is applicable, is applicable at the rate of 5%. (iii) In respect of supply of newspaper, it is submitted that the same being exempt vide Entry at S. No. 120 of Notification No. 2/2017 - Central Tax (Rate) dated 28.06.2017, Entry at S. No. 120 of Notification No. 2/2017 - Integrated Tax (Rate) dated 28.06.2017 and Entry at S. No. 120 of Notification No. 2/2017 -State Tax (Rate) dated 30.06.2017, no tax is payable. 5. Comments of Jurisdictional Officer (CGST): With respect to supply of food in Food Plaza/Food Stalls : For the purpose of this activity, the applicants perusal of relevant portion in entry in column (3) at S. No. 7 entry (i) of Notification No. 46/2017-Central Tax (Rate) dated 14.11.2017 seems to be correct. With respect to supply of food on board the trains: The applicant seeks to classif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes of this notification,- (iv) Wherever a rate has been prescribed in this notification subject to the condition that credit of input tax charged on goods or services used in supplying the service has not been taken, it shall mean that,- (a) credit of input tax charged on goods or services used exclusively in supplying such service has not been taken; and (b) credit of input tax charged on goods or services used partly for supplying such service and partly for effecting other supplies eligible for input tax credits, is reversed as if supply of such service is an exempt supply and attracts provisions of sub-section (2) of section 17 of the Central Goods and Services Tax Act, 2017 and the rules made thereunder. S. No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition (1) (2) (3) (4) (5) 7 Heading 9963 (Accommodation, food and beverage services) (v) Supply, by way of or as part of any service or in any other manner whatsoever in outdoor catering wherein goods, being food or any other article for human consumption or any drink (whether or not alcoholic liquor for human consumption), as a part of such outdoor catering and such sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces 88 - 996339 Other food, edible preparations, alcoholic and non alcoholic beverages serving services nowhere else classified 7. The S.No. 120 of Notification No. 2/2017 Central Tax (Rate) dated 28.06.2017 and parallel Notifications of IGST and Delhi GST reads as under: Schedule S. No. Chapter/Heading/Sub-heading/Tariff item Description of Goods (1) (2) (3) 120. 4902 Newspapers, journals and periodicals, whether or not illustrated or containing advertising material DISCUSSIONS: 8. The applicant has submitted a copy of 'Letter of Award' dated 02.08.2016 issued by IRCTC to them for setting up of and to operate 'Fast Food Unit' at Old Delhi Railway Station on payment of specified annual licence fee. The applicant has submitted that food and beverages (packed/MRP/cooked) are supplied by them to passengers at the rates fixed by the Indian Railways/IRCTC. However, details of food and beverages supplied, the method of prices and details of services have not been submitted. 9. The applicant has also submitted a copy of agreement dated 29.09.2017 between IRCTC and the applicant for temporary licence to manage on board catering services on Rajdhani Expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f number of passengers who actually boarded the train. 11. Similarly, the applicant has submitted a copy of agreement dated 07.08.2017 between IRCTC and the applicant for temporary licence to manage on board catering services on Duronto Express Train. The said agreement is similar to the agreement for on-board catering on Rajdhani Trains as mentioned above. 12. The applicant has also submitted a copy of Master Licence agreement dated 05.01.2015 between North Eastern Railway and the applicant for provision of pantry car/catering services in Shiv Ganga Express Train. Under the scope of 'Catering services on Train' in the said agreement, it is mentioned that the applicant shall supply and service of fully cooked meals/food to passengers on demand viz. breakfast, lunch, dinner, snacks tea, coffee etc. These meals/food will be prepared, packed and transported from Railway approved/nominated/authorised kitchens. The food has to be prepared and supplied to passengers as per recipe framed by the Railways. The menus and rates for each item is fixed by the Railways. The applicant is also required to distribute/serve Rail Neer/Packaged Drinking Water at rates decided by the Railways ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in the ordinary course of business, one of which is a principal supply; Illustration.- Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply; 15. From the above, it is observed that though a composite supply of various goods not involving services would be covered as a composite supply under Section 2(30) of the CGST Act, 2017 but still it would not be considered as a supply of services under Section 7(1) (d) of CGST Act, 2017 r/w Point 6 of Schedule II of the Said Act, because it is not covered in clause (b) of Point 6 of Schedule II. Only a composite supply containing services can be considered as supply of services. 16. The following clarifications has been issued by CBEC regarding "Composite Supply" under GST: A composite supply would mean a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply: A works contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffective rates of tax. None of the individual constituents are able to provide the essential character of the service. However, if the service is described as convention service, it is able to capture the entire essence of the package. Thus, the service may be judged as convention service and chargeable to full rate. However, it will be fully justifiable for the hotel to charge individually for the services as long as there is no attempt to offload the value of one service on to another service that is chargeable at a concessional rate. Whether the services are bundled in the ordinary course of business, would depend upon the normal or frequent practices followed in the area of business to which services relate. Such normal and frequent practices adopted in a business can be ascertained from several indicators some of which are listed below: * The perception of the consumer or the service receiver - If large number of service receivers of such bundle of services reasonably expect such services to be provided as a package, then such a package could be treated as naturally bundled in the ordinary course of business. * Majority of service providers in a particular area of busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to classify the whole contract as supply of services. 18. The Applicant has referred to the High Court of Delhi judgement dated 19.07.2010 in the case of IRCTC V/s Government of NCT of Delhi reported in 2010 (20) STR 437 (Del) to argue that supply of food on board the trains cannot be considered as outdoor catering service. It has been held by the Hon'ble High Court that providing of food, snacks and water to passengers on board trains is different from outdoor catering service. The IRCTC or passengers have no choice of articles or quantity served as the same is supplied as per menu fixed by Railway Board. The passengers have no choice as to time and place of services of food. No refund is allowed if food provided is not accepted. No element of service is involved except heating and serving cooked food. Service element in providing food in this case is incidental and base minimum required for selling food. The impugned contract/transaction is not for providing service nor a composite contract but is one of pure sale of goods. Service component in respect of sale of food in a restaurant is much more than supply of food to a passenger in a compartment of a train. 19. The Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 7 (i) of the said Notifications as claimed by the applicant. The supply of goods i.e. food, bottled water etc. shall be charged to GST on value of goods (excluding the service charges) at applicable rates as pure supply of goods, as the same have no element of service. The supply of newspaper is separately invoiced and hence it shall be at 'Nil" GST under S. No. 120 of Notification No. 2/2017- Central Tax (Rate) dated 28.06.2017 and parallel Notifications of IGST and Delhi GST. 24. In the case of supply of food and beverages (cooked/MRP/packed) on board the Mail/express trains by the applicant directly to the passengers as per the menu/rates fixed by IRCTC/Railways does not have any element of service and hence the same shall be considered as pure supply of goods and GST shall be charged on individual items at their respective applicable rates. The benefit of S. No. 7 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 vide Notification No. 46/2017 - Central Tax (Rate) dated 14.11.2017; amendment made in Notification No. 8/2017- Integrated Tax (Rate) dated 28.06.2017 vide Notification No. 48/2017 -Central Tax (Rate) dated 14.11.17; amendment made in Notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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