Food court items taxable at 5% GST under SAC 9963, ITC allowed for movie operations but denied for building maintenance under Section 17(5)

AAR MP ruled that food, soft drinks, and snacks sold in applicant's snack bar/food court are chargeable to GST at 5% under SAC 9963, meeting conditions of Notification 46/2017. ITC allowed in full for movie distributor revenue sharing, projector rental, and advertising bills. ITC for security and housekeeping bills restricted to taxable output services portion only. ITC denied for maintenance goods (tiles, marble, cement, sanitary items) and works contract services for building maintenance under Section 17(5) of GST Act 2017.

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Issues Involved:
1. GST rate on food, soft drinks, and snacks sold in the Snack Bar & Food Court.
2. ITC of GST paid on Movie Distributor revenue share bill, Projector Rental Bill, Advertising Bill, Security Agency Bill, and Housekeeping Bill.
3. ITC on GST paid on goods purchased for maintenance such as Vitrified Tiles, Marble, Granite, ACP Sheets, Steel Plates, TMT TOR, Bricks, Cement, Paint, Chemicals, Sanitary items.
4. ITC of GST paid on Works Contract service received from registered & unregistered contractors for maintenance contract of building.

Detailed Analysis:

Issue 1: GST Rate on Food, Soft Drinks, and Snacks Sold in the Snack Bar & Food Court

The applicant sought clarification on whether GST at 5% can be charged on food, soft drinks, and snacks sold in the Snack Bar & Food Court under Notification No. 46/2017. The Authority for Advance Ruling (AAR) found that the services provided by the applicant fall under the category defined in Notification No. 11/2017-Central Tax (Rate) as amended by Notification No. 46/2017-Central Tax (Rate). The relevant entry specifies that the supply of food and drinks by a restaurant, eating joint, or canteen, not providing lodging services, is chargeable to GST at 5% (2.5% CGST + 2.5% SGST), provided no input tax credit (ITC) is claimed on goods and services used in supplying the service. The AAR concluded that the applicant’s Snack Bar services are classifiable under SAC 9963 and chargeable to GST at 5%, subject to the conditions laid down in the notification.

Issue 2: ITC on GST Paid on Various Bills

The applicant sought to claim ITC on GST paid on Movie Distributor revenue share bill, Projector Rental Bill, Advertising Bill, Security Agency Bill, and Housekeeping Bill. The AAR held that these services are input services for the applicant's business operations and are attributable to providing declared output services. Therefore, ITC on these services is admissible under Section 16 of the GST Act, 2017. However, for services like Security and Housekeeping, which are also used for exempted supplies (e.g., Snack Bar), ITC must be apportioned, and the portion attributable to exempted supplies must be reversed as per Section 17(1) of the GST Act, 2017.

Issue 3: ITC on GST Paid on Goods for Maintenance

The applicant sought to claim ITC on GST paid on goods purchased for maintenance, such as Vitrified Tiles, Marble, Granite, ACP Sheets, Steel Plates, TMT TOR, Bricks, Cement, Paint, Chemicals, and Sanitary items. The AAR referred to Section 17(5)(d) of the GST Act, 2017, which prohibits ITC on goods or services used for the construction of an immovable property, including maintenance and renovation. The AAR concluded that since these goods are used for maintaining the Mall building, an immovable property, ITC on such goods is not admissible.

Issue 4: ITC on GST Paid on Works Contract Services

The applicant sought to claim ITC on GST paid on Works Contract services received from contractors for building maintenance. The AAR referred to Section 17(5)(c) of the GST Act, 2017, which disallows ITC on works contract services when supplied for the construction of an immovable property, except where it is an input service for further supply of works contract service. The AAR concluded that since the applicant uses these services for maintaining the Mall building and not for providing further works contract services, ITC on such services is not admissible.

Ruling:

1. GST Rate on Food, Soft Drinks, and Snacks: The items supplied in the Snack Bar and Food Court are chargeable to GST at 5% (2.5% CGST + 2.5% SGST) under Notification No. 11/2017-Central Tax (Rate) as amended by Notification No. 46/2017-Central Tax (Rate), subject to conditions laid down at Serial Number 7 of the parent Notification classifiable under SAC 9963.

2. ITC on Various Bills: ITC on Movie Distributor Revenue Sharing Bill, Projector Rental Bill, and Advertising Bill is fully admissible. For Security Agency Bill and Housekeeping Bill, ITC is restricted to the portion used for taxable output services, and any ITC attributable to exempted output services must be reversed as per Section 17(1) of the GST Act, 2017.

3. ITC on Goods for Maintenance: ITC on GST paid on goods purchased for maintenance, such as Vitrified Tiles, Marble, Granite, ACP Sheets, Steel Plates, TMT TOR, Bricks, Cement, Paint, Chemicals, and Sanitary items, is not admissible under Section 17(5)(d) of the GST Act, 2017.

4. ITC on Works Contract Services: ITC on GST paid on Works Contract services received for building maintenance is not admissible under Section 17(5)(c) of the GST Act, 2017.

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