Natural bundling test for hotel meal plans: separate food charges qualified for independent abatement from accommodation services.

Meal-plan charges for hotel guests were analysed as a separate restaurant service rather than part of a naturally bundled accommodation package because invoices split room and food charges, the customer could opt for room-only stay, and food and beverage supply was also available independently. On those facts, accommodation continued to receive the 40% abatement applicable to lodging, while the food and beverage component qualified for the separate abatement available to restaurant services. The result stated in the text is that separate abatement was correctly availed on the restaurant charges and the demand, penalty, and related tax liability were not sustainable.

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Issues: Whether meal-plan charges for food and beverages supplied to hotel guests were naturally bundled with accommodation services, or constituted independent restaurant services eligible for separate abatement.

Analysis: The invoices showed room charges and meal charges as separate line items, with separate tax treatment for accommodation and food services. The service recipient could choose room-only accommodation or opt for meal plans, and the food and beverage supply was also available independently. On these facts, the Tribunal found that the services were not supplied as one inseparable bundle in the ordinary course of business. The accommodation service continued to enjoy abatement at 40%, while the restaurant service was entitled to the separate abatement applicable to food and beverages.

Conclusion: The services were not naturally bundled, and the appellant correctly availed separate abatement on restaurant charges; the demand, penalty, and associated tax liability were not sustainable.

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