Restaurant service classification excludes tobacco and herbal hookah because smoking does not constitute consumption akin to food or drink.

Hookah supplied through an apparatus in a restaurant, whether tobacco-based or herbal, does not fall within restaurant service under paragraph 6(b) of Schedule II to the CGST Act. The deeming provision applies only where goods supplied form part of a service and are food, drink or another article of human consumption of a similar character. Applying common parlance, ejusdem generis and noscitur a sociis, hookah is ordinarily smoked rather than eaten or drunk, and restaurant facilities or service elements do not change that character. Composite-supply rules and rate notifications cannot expand the statutory scope. Such hookah is therefore taxable as a supply of goods under the applicable classification and rate notifications.

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Issues: Whether supply of tobacco-based and herbal hookah through a hookah apparatus in a restaurant, with attendant facilities, qualifies as restaurant service under paragraph 6(b) of Schedule II to the Central Goods and Services Tax Act, 2017.

Analysis: Paragraph 6(b) creates a deeming fiction only for supplies made as part of a service where the goods supplied are food, any other article for human consumption, or drink. The provisions concerning composite supply and principal supply govern tax consequences only after the transaction satisfies the statutory description of the relevant category; they cannot enlarge the scope of restaurant service. The rate notification likewise cannot extend the parent statutory provision.

Analysis: Applying the common parlance test, ejusdem generis and noscitur a sociis, the expression "any other article for human consumption" takes its meaning from food and drink and is confined to articles of a like character ordinarily consumed by eating or drinking. Hookah, whether tobacco-based or herbal, is ordinarily understood as being smoked and not as food, drink, or an article akin to them. Its preparation, apparatus, restaurant ambience and attendant service do not alter this statutory character. The separate fiscal and regulatory treatment of tobacco products contextually supports this interpretation; the conclusion regarding herbal hookah independently follows from the interpretation of paragraph 6(b).

Conclusion: Tobacco-based and herbal hookah supplied through a hookah apparatus in a restaurant do not qualify as restaurant service under paragraph 6(b) of Schedule II to the Central Goods and Services Tax Act, 2017 and are taxable as supplies of goods under the applicable classification and rate notifications. The conclusion is against the assessee.

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