2024 (10) TMI 192 - AAR - GST

Composite supply of catering services with premises rental constitutes outdoor catering attracting 5% GST without input tax credit

AAR West Bengal ruled that composite supply of catering services within club premises along with renting of premises constitutes outdoor catering service. ... Classification of service - Outdoor Catering service along with Renting of Premise or not - composite supply of catering service within the club premise along with renting of premise - applicable rate of GST on the catering service along with renting of premise - HELD THAT:- Where the applicant provides renting of premises along with supply of food at any event, such supply would attract tax @ 5% with the restriction of input tax credit and subject to the condition that the Room Tariff of the club does not exceed Rs. 7,500/- per unit per day or equivalent. Clarification given in the CBIC Circular 27/01/2018-GST dated 04.01.2018 as referred by the applicant is to be followed in order to determine whether the applicant is located in ‘specified premises’ or the supply is provided at ‘specified premises’. Composite supply of catering services within the club premises along with renting of premises falls under ‘outdoor catering service together with renting of premises” arranged at premises other than 'specified premises' - GST is payable against whole consideration of the composite supply @ 5% without ITC subject to condition imposed. Issues Involved:1. Classification of the composite supply of catering service within the club premises along with renting of premises as 'Outdoor Catering service along with Renting of Premise.'2. Applicable GST rate on the composite supply of catering service within the club premises along with renting of premises.3. Whether the club has the option to charge GST at different rates based on room tariff changes during peak seasons.Issue-wise Detailed Analysis:1. Classification of the Composite Supply:The primary issue is whether the composite supply of catering services within the club premises, along with renting of premises, can be classified as 'Outdoor Catering service along with Renting of Premise.' The applicant contends that the services provided are naturally bundled, comprising renting of premises and catering services, which are event-based and occasional in nature. According to the definition provided in Notification No. 20/2019-Central Tax (Rate), 'outdoor catering' includes supply of food or drinks at event-based functions. The Authority for Advance Ruling (AAR) agreed with the applicant, determining that such a supply qualifies as 'outdoor catering service together with renting of premises' when arranged at premises other than 'specified premises.'2. Applicable GST Rate:The applicant sought clarity on whether the composite supply should be taxed at 5% without Input Tax Credit (ITC) or at 18% with ITC. The AAR referred to the GST Council's recommendations and the relevant notifications, concluding that the composite supply of catering services along with renting of premises should attract GST at 5% without ITC, provided the room tariff does not exceed Rs. 7,500 per unit per day. This decision is contingent upon the services being provided at premises other than 'specified premises,' which are defined as those with a declared tariff above Rs. 7,500.3. Option to Charge Different GST Rates Based on Room Tariff:The applicant questioned whether they could opt to charge GST at 18% with ITC if the room tariff increased to Rs. 7,500 or above during peak seasons. The AAR clarified that if the room tariff is declared above Rs. 7,500 per unit per day, the premises would be considered 'specified premises,' and the GST rate applicable would be 18% with ITC. The ruling aligns with the CBIC Circular No. 27/01/2018-GST, which states that the applicable GST rate depends on the declared tariff at the time of service provision. Therefore, the club must adhere to the 5% GST rate without ITC when the tariff is below Rs. 7,500 and shift to 18% with ITC when the tariff exceeds this threshold.Ruling Summary:1. The composite supply of catering services within the club premises, along with renting of premises, is classified as 'Outdoor Catering service together with Renting of Premises' when not provided at 'specified premises.'2. The applicable GST rate for such composite supply is 5% without ITC, provided the room tariff does not exceed Rs. 7,500 per unit per day.3. If the room tariff exceeds Rs. 7,500, the supply is considered at 'specified premises,' and the GST rate applicable is 18% with ITC.