GST classification of restaurant, event and club services, with input tax credit reversal required for concessional restaurant supplies.

Food supplied by a restaurant, including food provided as part of social events with premises rental, is treated as a composite supply and classified under SAC 9963 under the applicable rate notification entry. Separate club services not bundled with food, such as swimming and other amenities charged independently, are classifiable under SAC 9995 as membership organisation services under the specified entry. Where the concessional restaurant rate is conditional on non-availment of input tax credit, credit attributable to those supplies must be reversed and apportioned under the GST Act and Rules, treating the supplies as exempt for apportionment purposes.

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Issues: (i) Whether the applicant's restaurant supplies of food and food supplied as part of social events were classifiable under the notified service entries and the applicable rate notification entries; (ii) whether the applicant's other club services were classifiable separately as membership organisation services; and (iii) whether input tax credit attributable to supplies taxed at the concessional restaurant entry had to be reversed and apportioned under the GST rules.

Issue (i): Whether the applicant's restaurant supplies of food and food supplied as part of social events were classifiable under the notified service entries and the applicable rate notification entries.

Analysis: Supply of food by way of or as part of any service is treated as a composite supply and as a service under Schedule II. On the facts, restaurant supplies fall within SAC 9963 and are covered by the relevant entries in Notification No. 11/2017-CT (Rate) dated 28/06/2017, with the applicable entry depending on the conditions attached to the supply. Food supplied as part of organising social events together with renting of the premises is also covered by the specified event-related entry.

Conclusion: The restaurant and event-related food supplies were held classifiable under SAC 9963 and taxable under the relevant entries of the rate notification.

Issue (ii): Whether the applicant's other club services were classifiable separately as membership organisation services.

Analysis: Services of a club that are not bundled with food and are charged separately constitute membership organisation services. Such services, including swimming and other amenities, are classifiable under SAC 9995 and fall under the specific service entry for such organisations.

Conclusion: The applicant's other club services were held classifiable under SAC 9995 and taxable under the specified entry for membership organisation services.

Issue (iii): Whether input tax credit attributable to supplies taxed at the concessional restaurant entry had to be reversed and apportioned under the GST rules.

Analysis: Where the rate notification prescribes a concessional rate subject to non-availment of input tax credit, credit attributable to such supplies cannot be retained. The ruling applied the reversal and apportionment mechanism under the GST Act and the GST Rules, treating such supplies as exempt supplies for the purpose of apportionment.

Conclusion: Input tax credit attributable to supplies falling under the concessional restaurant entry had to be reversed and apportioned in accordance with the GST Act and GST Rules.

Final Conclusion: The ruling determined the applicable GST classification and rates for the applicant's food and club-related services and required reversal of credit for the concessional restaurant supplies, thereby answering the advance ruling questions on both taxability and input tax credit treatment.

Ratio Decidendi: Food supplied as part of a composite service is taxable under the relevant notified service entry for that composite supply, and where the concessional rate is conditioned on non-availment of input tax credit, the credit attributable to such supply must be reversed and apportioned as prescribed.

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