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TMI Blog2020 (10) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... se to serve alcohol (relevant for the notification before amendment. From the above notification and amendments, it is seen that supply of soft beverages/aerated water, whether in person or room service, by the restaurant located in the premises of the hotel is taxable to GST at the rate of 18%. In the instant case, supply of tobacco products by the restaurant is not a composite supply but involves supply of two individual supplies of goods (tobacco products) and supply of services of serving by the restaurant. Such a supply is a mixed supply - In the instant case, the applicable rate of tax for cigarettes classifiable as CTH 2402 is 14% CGST and 14% SGST as per Sl.no 14 of Schedule IV of Notification No. 1/2017-C.T. (Rate) dated 28.06.2017 and Notification No. II (2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended. Apart from this GST Compensation Cess is applicable at specified rates for different kinds of cigarette product as per Notification No.1/2017-Compensation Cess (Rate) DT 28.6.2017 as amended. Hence, in the case of the mixed supply of cigarettes by the restaurant, in person or room service, the applicable rate is the rate applicable to supply of cigar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions MFAR HOTELS & RESORTS PRIVATE LIMITED, 154/6, Velachery Main Road, Velachery, Chennai-600042. (hereinafter referred to as 'Applicant') is registered under the GST Act 2017 vide GSTIN No. 33AABCM9267F1ZF. The Applicant owns and manages hotel and resorts. The applicant has preferred an application seeking Advance Ruling on the following questions: 1. What is the rate of tax applicable on the supply of Soft Beverages (Aerated Water) and Tobacco (Smokes) when these items are supplied independently and not as composite supply in the restaurant? In other words what is the rate of GST if these items alone are supplied and not along with food as Composite supply to the guest? 2. Whether supply of liquor is deemed to be the "exempt supply" under GST Act as per Section 2 (47) of CGST Act for the purpose of proportionate reversal of ITC as per Rule 42 of CGST rules 2017? 3. It is obligatory on the part of employer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also stated that they are not maintaining a separate account for purchase of food items for canteen purposes and a single account is being maintained both for restaurant and canteen. The ITC on the inward supply of food items is taken by the applicant. 2.5 In view of the above facts, the applicant has sought the authority of Advance Ruling on the questions raised in Para 1 supra. 3.1 The applicant was given an opportunity to be personally heard on 30.08.2019. The applicant appeared before the authority for Advance Ruling and stated that they supply soft beverages, filter cigarettes exceeding 75mm (HSN 2402 2090) in restaurant and in room service. This is mentioned in their menu for restaurant/bar room service. They stated that they will submit copies of menu and sample bills for each. They stated that they are charging 28% +cess whereas the clients demand to tax @18%. They are charging @18% on other room & restaurant service. In respect of the 2nd and 3rd question they stated that they wish to rephrase the question regarding taxability of liquor and Supply of free food to employees. They stated that they will submit copies of menu, invoices for restaurant/bar and room service. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant. We find that the applicant has stated that they are a 5 star hotel offering variety of services such as rooms and suites, banquets, dining, spa, etc. They supply soft beverages (Aerated water), Tobacco (smoke) on certain occasions and not as composite supply. They supply Non-GST item liquor to guest in the restaurant. They supply free food to employees as per the terms of the contract with the employees. The applicant in their application has sought ruling on the following questions: 1. What is the rate of tax applicable on the supply of Soft Beverages (Aerated Water) and Tobacco (Smokes) when these items are supplied independently and not as composite supply in the restaurant? In other words what is the rate of GST if these items alone are supplied and not along with food as Composite supply to the guest? 2. Whether supply of liquor is deemed to be the "exempt supply" under GST Act as per Section 2 (47) of CGST Act for the purpose of proportionate reversal of ITC as per Rule 42 of CGST rules 2017? 3. It is obligatory on the part of employer to supply free food to the employees. Whether such free supply of food is liable to reverse ITC on inputs as per Rule 42 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as part of food in the buffet and bills these items separately in the bill from the restaurant. The menu is common for room service & restaurant. The applicant claim that supply of Soft Beverages and/or Cigarette alone in the restaurant is not a composite supply and that they are billing such supply (t) 28% GST & applicable compensation cess. 6.3 Supply is defined under Section 7 of the CGST Act 2017 and the same is reproduced below for reference: 7. (1) For the purposes of this Act, the expression "supply" includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; and (c) the activities specified in Schedule I, made or agreed to be made without a consideration; (1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.; Schedule-II o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied in conjunction each other and hence is a composite supply as per Section 2(30) of the Act. 6.4.2 Further, as per para. 6 (b) of Schedule II to the CGST /TNGST Act, the composite supply of goods being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration is a Supply of Service. In this instance, supply of soft beverages/aerated waters being drinks (other than alcoholic liquor for human consumption) and articles for human consumption in as a part of any service is a composite supply of service. The payment in this case can be immediate or billed to the room for residents. The relevant Explanatory notes for the Classification of Services states: 99633 Food, edible preparations, alcoholic& non-alcoholic beverages serving services 996331 Services provided by Restaurants, Cafes and similar eating facilities including takeaway services, Room services and door delivery of food. 996332 Services provided by Hotels, IAN, Guest House, Clubs etc. including Room services, takeaway services and door delivery of food. It is seen that su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng or Group Service Code (Tariff) Rate (percent) Condition (1) (2) (3) (4) (5) 7 Heading 9963 (Accommodation, food and beverage services) (vi) Accommodation, food and beverage services other than (i) to (v) above Explanation: (a) For the removal of doubt, it is hereby clarified that, supplies covered by items (ii), (iii), (iv) and (v) in column (3) shall attract central tax prescribed against them in column (4) subject to conditions specified against them in column (5), which is a mandatory rate and shall not be levied at the rate as specified under this entry. (b) This entry covers supply of "restaurant service" at specified premises 9 Explanation to this notification states: "(xxxii) "Restaurant service" means supply, by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied. (xxxv) "Declared tariff' means charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each other by a taxable person for a single price where such supply does not constitute a composite supply. In the instant case, supply of tobacco products by the restaurant is not a composite supply but involves supply of two individual supplies of goods (tobacco products) and supply of services of serving by the restaurant. Such a supply is a mixed supply. 6.5.2 As per Section 8(b) of the Act, the tax liability on a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. In the instant case, the applicable rate of tax for cigarettes classifiable as CTH 2402 is 14% CGST and 14% SGST as per Sl.no 14 of Schedule IV of Notification No. 1/2017-C.T. (Rate) dated 28.06.2017 and Notification No. II (2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended. Apart from this GST Compensation Cess is applicable at specified rates for different kinds of cigarette product as per Notification No.1/2017-Compensation Cess (Rate) DT 28.6.2017 as amended. Hence, in the case of the mixed supply of cigarettes by the restaurant, in person or room service, the applicable rate is the rate applicable to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be provided in Café @154-Associate Dining Room….." From the said document, it is evident that as part of Terms & Conditions to the appointment, the applicant extends food to their employees for which no separate consideration is charged from the employees. 8.2 The activities even without consideration but specified at Schedule-I of the Act is within the scope of supply as per Section 7(1) (c) of the GST Act. Schedule I of the Act. para 2 states Activities or Transactions to Be Treated As Supply Even If Made Without Consideration 2. Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business:. As per the Explanation to Section 15 of the Act,- For the purposes of this Act, (a) persons shall be deemed to be "related persons" if- (iii) such persons are employer and employee; In the case at hand, the applicant provides food through a separate canteen to their employees, who are related persons as a part of the employment contract, i.e., in the course or furtherance of business. Therefore, as per Para 2 to Schedule I of the CGST/TNGST Act, supply ..... X X X X Extracts X X X X X X X X Extracts X X X X
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