AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (4) TMI 594
X X X X Extracts X X X X
X X X X Extracts X X X X
.... as per the slabs provided under Notification No.11/2017- Central Tax (Rate) i.e. what will be the liability to pay GST i.e. to say that declared tariff represents only the charges for room stay plus service charge and the customer books only hotel accommodation and the rest optional facilities are procured after checking in at the hotel ? (ii) If the answer to query no. 1 results in liability to pay GST as in tariff being lesser than Rs. 7,500/-, whether the applicant will be liable to pay 5% GST on restaurant services to the guest who stays at hotel as well as to any outsider who comes just to eat at the restaurant and not 18% GST in terms of Notification no. 46/2017- Central Tax (Rate)? (iii) If the applicant is charging money towards room stay, breakfast, airport pick up and drop, as well as extra bed plus meals i.e. the package covers everything and individual value is not assigned at the time of booking but when invoice is given to the customer there is a specific mention of each item and separate value assigned to each service, and the sum total exceeds Rs. 7,500/-, what would be the liability of GST i.e. the price offered to customer represents a package o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied, other than those located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent. Explanation.- "declared tariff includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit. 2.5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation no. (iv)]."; "(iii) 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, where such supply or service is for cash, deferred payment or other valuable consideratio....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. • Definition of Mixed Supply: Sec 2(74) defines Mixed Supply and it reads as follows:- (74) "mixed supply" means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. Clarification issued: • Circular Number 27/2018-GST F. No. 354/107/2017-TRU The Hon'ble Ministry of Finance has issued a circular whereby certain clarifications have been made and the relevant extract of the same is reproduced below:- Sr.No. Questions/Clarifications Sought Clarifications 1 1. Will GST be charged on actual tariff or declared tariff for accommodation services? 1. Declared or published tariff is relevant only for determination of the tax rate slab. GST will be payable on the actual amo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....: Illustration 1: The break-up of the invoice comes as follows for one night stay i.e. 2 days and 1 night:- Description of service Amount (Rs.)[excluding GST] Remarks Room stay plus service charge for double occupancy 7400 Declared tariff given to the proposed customer at time of Breakfast 1000 Optional Service added extra Airport pick up and drop 1000 Optional Service added extra Food bill 1800 Ate dinner at restaurant Heritage Walk 800 Optional Service added extra Total Invoice 12000 The applicant also runs a restaurant business apart from accommodation and is unable to ascertain the rate of GST to be charged. It is very pertinent to note that breakfast, airport pick up drop, heritage walk, charges for lunch/dinner are optional services and one may or may not choose to avail these additional services. Hence, these services cannot be said to be naturally bundled and there is no composite supply. Each service is unique, different, not inter dependent on each other and is optional. In the opinion of the applicant, based on the explanation provided in the Notification ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The applicant is further fortified in its view by the clarification issued by Ministry of Finance on 4th January, 2018 as well as the fact the charges towards various other services are nowhere in room services. The definition of declared tariff speaks about inclusion of charges for amenities provided in unit of accommodation such as refrigerator, furniture, air condition etc. This leads one to the conclusion that in order to stay in the room the hotel provides refrigerator, bed, furniture and air condition which represent a basic infrastructure of the property. All other items such as extra bed, items placed in refrigerator, breakfast, etc. are optional services which the guest may or may not consume. The definition of declared tariff forms a genus of services which never ever includes anything other charges for infrastructure. More so, even the extra bed as clarified nowhere gets included in declared tariff. In view of these, the applicant is fortified in its opinion that the 18% GST will apply on room stay plus service charge and not 28% GST. Opinion in relation to query 4: As demonstrated in illustration 2, the tariff of the applicant falls below Rs. 7500/- and hence, in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the applicant has to be adopted and, hence, the applicant must be ordered to discharge liability on restaurant services at 5% on days tariff falls below Rs. 7500/- and at 18% only on the days tariff exceeds Rs. 7500/-. Opinion in relation to query 6: The applicant urges that the Low Category rooms are sold at a tariff of Rs. 3,400/- which includes charges far room stay and breakfast. The breakfast is offered as inclusion and invoice would reflect two charges. Based on the tariff slab, liability to pay GST on room stay will be 12%. An illustration would better explain the query of applicant. Illustration 4:- Invoice for low category rooms: Sr.No. Particulars Amount (Rs.) Remarks 1 Room Stay Plus Service Charge 2,400 2 Breakfast 1,000 Optional additional Service 3 Heritage Walk 800 Optional additional Service 4 Airport Pick up and drop 1,000 Optional additional Service Total 5,200 Also Heritage Walk and pick-up drop facility being additional services not connected with tariff would attract 18% G.S.T. However, as the applicant char....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he case of applicant is not known by this office. 3. The applicant containing items reflecting charges towards room stay, services charge, breakfast, airport pickup & drop, extra bed form part of Tariff for providing facilities to accommodate the hotel facilities and these all activity are related with each other for hotel business and therefore these services are bundled service by the way of supply. Therefore the GST rate may be applicable @ 28% on the bundled services. Discussion & Finding: 6. We have gone through the facts of the case, documents on record and submission made by the Applicant as well as Jurisdictional Authority. 7. We find that the Applicant runs a boutique hotel as well as restaurant. The restaurant of the applicant is situated in the hotel's premises. The applicant charges tariff for room stay from the customers based on the seasons. The invoice raised depicting money charged from the customer of the applicant comprise of the following:- • Room stay • Service charge • Breakfast • Airport pickup and drop • Extra Bed • Laundry services • Lunch/Dinner ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....k is supplied, other than those located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent. Explanation. - "declared tariff" includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air-conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit. 2.5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation no. (iv)] (ii) Accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of a unit of accommodation of one thousand rupees and above but less than two thousand five hundred rupees per unit per day or equivalent. Explanation.- "declared tariff" includes charges for all amenities provided in the unit of accommodation (given on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... per unit per day or equivalent. Explanation.-"declared tariff " includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit. 14 - (ix) Accommodation, food and beverage services other than (ii), (iii), (v), (vi), (vii) and (viii) above. Explanation.- For the removal of doubt, it is hereby clarified that, 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 drink, where such supply or service is for cash, deferred payment or other valuable consideration, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied, other than those located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....accommodation provided by way of upgrade is Rs. 10000, but amount charged is Rs. 7000, then GST would be levied @ 28% on Rs. 7000/-. Supply of Room or unit accommodation services by hotel: 11. From the above, it clearly reveals that GST Rate for the 'Supply of Room or unit accommodation services by hotels' would be determined according to declared tariff for the room, and GST at the rate so determined would be levied on the entire amount charged, for room stay plus service charges and extra bed, from the guest/customer. The HSC code (Tariff Group/ Heading) for the supply of Room or unit accommodation services by hotel shall be 996311. According to declared room tariff, the rate of GST for said services will be as under: 1. Declared Room Tariff up to Rs. 999/- : GST @ NIL [Remark - No ITC Credit]. 2. Declared Room Tariff from Rs. 1000/- up to Rs. 2499/-: GST @ 12% [ITC Credit allowed]. 3. Declared Room Tariff from Rs. 2500/- up to Rs. 7499/-: GST @ 18% [ITC Credit allowed]. 4. Declared Room Tariff from Rs. 7500/- and above : GST @ 28% [ITC Credit allowed]. 'Supply of food and beverage services by restaurants in hotel premises': 12.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 14. We further find that the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, as amended and Notification No. 11/2017-State Tax (Rate) dated 30.06.2017, as amended also provides rate of GST for 'Other services' of Heading 9997. The part of the Sr. No. 35 of the Notification No.11/2017Central Tax (Rate) dated 28.06.2017, as amended, relevant for examining the present issue, is as follows: Sl. No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition (1) (2) (3) (4) (5) 35 Heading 9997 Other services (washing, cleaning and dyeing services; beauty and physical well-being services; and other miscellaneous services including services nowhere else classified). 9 - 14.1 We find that the applicant also separately charges for 'laundry services' and 'heritage walk services' from the guests/customers. These services nowhere else classified in GST Acts. The HSC code (Tariff Group/ Heading) for the supply of the 'Other services n.e.c.' shall be 999799. The rate of GST for above services will be 18% with ITC, as mentioned above. 15. In light of the above, we rule as under: R U L I N G Question-1: Whet....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r, from the guest/customer. The HSC code (Tariff Group/ Heading) for the 'supply of food and beverage services by restaurants in hotel premises' shall be 996332. According to declared room tariff, the rate of GST for said services will be as under: (i) Restaurants in hotel premises having room tariff of less than Rs. 7500/- per unit per day will attract GST of 5% without ITC. (ii) Restaurants in hotel premises having room tariff of Rs. 7500/- and above per unit per day (even for a single room) will attract GST of 18% with full ITC. (c) The supplies of the services of 'Airport pickup and drop' shall be taxable under 'Passenger transport services'. The Applicant is liable to pay GST @ 18% with ITC on airport pickup and drop charges collected from guest under 'Passenger transport services'. The HSC code (Tariff Group/ Heading) for the supply of the 'Passenger transport services' shall be 996412. (d) The supplies of services of 'Laundry' and 'Heritage walk' shall be taxable under 'Other services n.e.c.'. The Applicant is liable to pay GST @ 18% with ITC on amount collected for services of laundry and heritage walk from guest under 'Other services n.e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urant services'. Further, the Applicant is liable to pay GST @ 18% with ITC on airport pickup and drop charges collected from guest under 'Passenger transport services'. Question-4: If the answer to query no. 3 results in liability to pay GST as in tariff being lesser than Rs. 7,500/- whether the applicant will be liable to pay 5% GST on restaurant services to the guest who stays at hotel as well as to any outsider who comes just to eat at the restaurant in terms of Notification no. 46/2017 CGST (Rate) and not 18% GST? Answer: In case declared room tariff of less than Rs. 7500/- per unit per day, M/s Mangaldas Mehta and Co. Limited (GSTIN-24AAACM4217CIZ5) is liable to pay GST @ 5% without ITC on restaurant services provided to the guest who stays at hotel as well as to any outsider who comes just to eat at the restaurant. Question-5: During the financial year, on account of low season, the tariff remains below Rs. 7,500/-. However in peak season, the room tariff exceed Rs. 7,500/-, then in this situation, whether the liability of the applicant to pay GST at 18% on restaurant arises from inception or from the day the tariff exceeds Rs. 7,500 and it falls back to 5% as soon ....