GST Provision on Providing Alcohol Liquor in Club

[NILESH PITALE]

Respected Expert

My Client is intend to start the Club where in He will Provide Foods & Alcohol Liquor, What Will Be GST Implication, Is VAT is Applicable on Liquor and GST is Applicable on Foods Seperatly

Please Guide , How to Process

Regards & Thanks

[Sadanand Bulbule]

Dear Nilesh ji

Only food is taxable. Alcoholic liquor for human consumption is outside the ambit of GST regime vide Section 9[1] and the VAT Act is no more live. So in tax invoice, supply of these articles/price need to be separately shown and accordingly charge applicable GST on supply of food only.

[VENU K]

The supply of food is generally taxed as a composite supply of service as per Para 6 b of Schedule II

Supply by way of or as part of any service or in any other manner whatsoever of goods being food or any other article for human consumption or any drink (other than alchoholic liquor for human consumption) where such supply is for cash deferred payment or other valuable consideration

Generally under  GST, restaurants fall under the 5% GST rate, with no option to claim input tax credit (ITC)

In my understanding Petroleum products as well as alchoholic liquor were even outside VAT atleast in the state of Kerala. In Kerala it was taxed under Kerala General Sales Tax Act (KGST) even during the period of VAT regime. This law exists even today. Petroleum products (Only first sale in the state is taxed) do get taxed. Similarly all retail outlets as well as bars are paying tax on alchoholic liquor under KGST Act. Tax on petroleum products and liquor are the major source of revenue as far as states are concerned on which they have control, which can be hiked by state legislatures.

So in my opinion GST is applicable on sale of food beverages (Other than alchoholic liquor) and the respective state tax shall be payable as far as sale of liquor is concerned.

It should also be verified whether the respective state government has powers as per their laws to tax clubs (Mutuality concept and Calcutta Club judgment) and whether they are taxing the same. If yes supply of alchoholic liquor is definitely taxable under the state laws.

[KASTURI SETHI]

Alcoholic Liquor is subject  to State duty.

[Shilpi Jain]

Tax on liquor for human consumption is VAT and not GST.

Though if there is no breakup between the amount charged for liquor and for food then the entire amount collected by club would be liable to GST and the liquor portion will be liable to VAT as well. 

So better to  bifurcate the consideration

[Shilpi Jain]

If your night club is in a premises where accommodation services are not provided the food will be 5% without ITC.

Though further details would enable giving proper advice

[KASTURI SETHI]

I support the views of Madam Shilpi Jain. Thus the client will  be able to  avoid composite supply de jure.

AI Summary

Alcoholic liquor outside GST: state duties apply while food supplies attract GST, so separate invoicing is essential.
Alcoholic liquor for human consumption is excluded from GST and remains subject to state taxation, while supplies of food and non alcoholic beverages fall within GST and commonly attract the restaurant GST rate with limits on input tax credit. If invoices do not separately show the liquor portion, the entire consideration may be exposed to GST treatment in addition to state tax on liquor; proper bifurcation and characterisation of supplies is therefore essential.