Restaurant within Hotel Subject to 18% GST for Services Catering to Hotel Guests

The Authority ruled that the rate of tax applicable to the applicant providing restaurant services is 18% GST (9% each of CGST and SGST). The decision was based on the close relationship between the restaurant and the hotel, shared premises, and primarily catering to hotel clientele, falling under the 18% GST category as per Notification No. 11/2017-CT(Rate) due to its location within the hotel premises with a tariff exceeding Rs. 7500 per unit/room per day.

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Issues:
Rate of tax applicable to the applicant providing restaurant services as per the facts of the case.

Analysis:
Issue 1 - Rate of Tax Applicable:
The applicant sought an advance ruling to determine the rate of tax applicable to their restaurant services. The applicant contended that their restaurant, situated in a retail arcade owned by a hotel, did not offer lodging services, and hence, should be taxed at 5% as per their interpretation of the relevant notifications. On the other hand, the jurisdictional officer argued that the restaurant was an integral part of the hotel premises and should be taxed at 18%. The Authority observed that the restaurant and the hotel shared common premises with inter-connectivity, indicating a close relationship. The applicant's restaurant primarily catered to the hotel clientele, which influenced the ruling. The Authority concluded that the applicant's restaurant fell under the 18% GST category as per Notification No. 11/2017-CT(Rate) due to its location within the hotel premises with a tariff exceeding Rs. 7500 per unit/room per day.

Final Decision:
The Authority, after considering all submissions and observations, ruled that the rate of tax applicable to the applicant providing restaurant services in the given case is 18% GST (9% each of CGST and SGST).

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