TaxTMI 
TaxTMI 
Dear sir,
What is the rate of tax cigarettes supplied in Bar and restaurant, whereas as food rate is 5%. HSN/SAC code. please clarify.
Rate of tax
06 Sep 2022 
12 Replies 
5342 Views Asked by
GST classification of cigarettes affects whether they follow sin goods treatment or restaurant composite supply with ITC limits.
Cigarettes are classifiable as tobacco products and under existing notifications attract the higher tax rate plus compensation cess regardless of place of supply. Where a bar or restaurant supplies cigarettes as part of a composite supply of food/drink, that supply may be characterised as a restaurant service and billed under the restaurant entry at the lower rate, but this carries risks: denial of Input Tax Credit, possible compensation cess liability, and revenue authority practice and precedents favouring sin goods treatment, leaving classification legally uncertain. (AI Summary)
Cigarettes are classifiable as tobacco products and under existing notifications attract the higher tax rate plus compensation cess regardless of place of supply. Where a bar or restaurant supplies cigarettes as part of a composite supply of food/drink, that supply may be characterised as a restaurant service and billed under the restaurant entry at the lower rate, but this carries risks: denial of Input Tax Credit, possible compensation cess liability, and revenue authority practice and precedents favouring sin goods treatment, leaving classification legally uncertain. (AI Summary)