Railway food service attracts 5% GST without input credit, newspaper supply remains exempt from GST

The AAAR Delhi ruled on GST rates for railway food/beverage supply and newspaper distribution. Following CBIC clarification dated 23.03.2018, the appellant's supply of food/drinks in trains or at platforms (both A/C and non-A/C) attracts 5% GST without input tax credit, overruling the previous advance ruling. For newspaper supply on trains, the authority held it exempt from GST under Entry 120 of various notifications dated 28.06.2017 and 30.06.2017, making no tax payable on newspaper supplies.

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Issues:
- Applicability of tax rates on the supply of food and beverages by the appellant in various scenarios.
- Tax treatment of the supply of newspapers in the mentioned cases.

Analysis:
The appeal was filed against an Advance Ruling regarding the tax implications on the supply of food and beverages by the appellant in different situations. The appellant, a supplier of food on trains and railway platforms, sought clarification on the applicable tax rates under the CGST Act and SGST Act. The appellant supplied food on Rajdhani and Mail/Express trains, as well as at food stalls on railway platforms. The Advance Authority for Rulings ruled that the service charges for supplying food on Rajdhani trains fall under catering services in trains, subject to specific notifications. The supply of food on Mail/Express trains and at food stalls on platforms was considered pure supply of goods, attracting GST on individual items at applicable rates.

Regarding the supply of newspapers, the ruling stated that they were separately invoiced and exempt from GST under relevant notifications. The personal hearing emphasized the prospective nature of a clarification by the Ministry of Railways, supported by statutory provisions. The appellate authority reviewed the case records and submissions, noting subsequent amendments to the relevant tax notifications. A clarification from CBIC highlighted the need for uniform tax rates on food and drinks supplied by the Indian Railways, leading to a ruling that the GST rate on food and drinks by the appellant would be 5% without ITC.

The appellate authority overruled the Advance Authority's order on the tax rate for food and drinks, aligning it with the CBIC clarification. However, no ruling was provided on the retrospective or prospective effect of the order. The exemption on the supply of newspapers was upheld under the relevant GST notifications. The final order established the GST rate for food and drinks by the appellant at 5% without ITC and confirmed the exemption for the supply of newspapers.

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