TaxTMI 
TaxTMI 
2024 (2) TMI 847
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....oms, spa & swimming Pool] ii) Agashiye [restaurant] iii) Green House (restaurant] iv) Gammat [kids play area] v) Dev Viman [Banquet] vi) Style shop [Retail outlet selling antique goods & other items] vii) Kitchen viii) Concierge Raipur, Old City Pol Kholi (HMG-1, HMG-2 ie Hotel rooms] 3. The applicant has a demarcated area for the heritage hotel room, kitchen, courtyard & restaurant. As the declared tariff of the applicant falls below Rs. 7500/- the applicant charges 5% GST on the restaurant services. 4. The applicant by virtue of the mandatory rate of 5% GST for restaurant service, is not entitled to claim ITC for the restaurant service & provisions of section 16 of the CGST Act, 2017, do not apply to the applicant in so far as the restaurant business is concerned. 5. The applicant has further stated as follows: • that they have to incur huge expenditure for upkeep and maintenance of heritage property; • that they capitalize the expenses along with GST & for revenue expenditure incurred they intend to claim ITC; • that there are usual running expenses which have also suffered GST; • that in vie....
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.... • that they use the input, input services and capital goods for business purpose only and not for any other purpose; • rate notification provides for prohibition of ITC and the said power is exercised u/s 16; • the provisions of section 17 does not apply to restaurant business & consequently Rule 42 would not come into play. 6. In light of the foregoing submissions, the applicant has sought advance ruling on the below mentioned question viz (i) Whether the applicant is entitled to claim input tax credit of the expenses incurred for the general expenses of the Company which arc meant for the purpose of business? (ii) Whether the applicant is entitled to enjoy the benefit of the input tax credit based on the square foot & area of usage of the premises? (iii) Whether the provisions of Rule 42/43 of the CGST Rules, read with SGST Rules are not applicable to the claim of the input tax credit of the applicant as the declared tariff of the hotel rooms never exceeds Rs. 7499/- at any time during the year. 7. Personal hearing in the matter was held on 29.08.2023 wherein the applicant was represented by Shri Soham Mashruwal....
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....l, and on being satisfied that it is necessary in the public interest so to do. hereby notifies that the central tax. on the intra-State supply of services of description as specified in column (3) of the Table below, falling under Chapter, Section or Heading of scheme of classification of services as specified in column (2), shall be levied at the rate as specified in the corresponding entry in column (4), subject to the conditions as specified in the corresponding entry in column (5) of the said Table:- TABLE SI.No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition (1) (2) (3) (4) (5) 7 Heading 9963 (Accommodation, food and beverage services) (i) 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, neither having the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year nor having licence or permit or....
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....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. 9 - (vii) Supply, by way of or as part of any service or in any other manner whatsoever, of goods, including but not limited to food or any other article for human consumption or any drink (whether or not alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration, in a premises (including hotel, convention center, club, pandal. shamiana or any other place, specially arranged for organising a function) together with renting of such premises. 9 - (viii) Accommodation in hotels including five star 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 seven thousand and five hundred rupees and above per unit per day or equivalent. 14 - Explanation. - "declared tariff'....
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....anner 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 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, 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. 9 -"; (c) the item (iv) in column (3) and the entries relating thereto in columns (3), (4) and (5), shall be omitted; (d) in item (ix), in column (3). for the entry, the following entry shall be substituted, namely "(ix)....
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....l arrangement with such institution for such supply, provided that such supply is not event based or occasional. Explanation 2. - This item excludes the supplies covered under item 7(v). Explanation 3.- "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)] (b) in items (ii), (vi) and (viii),- (A) for the words "declared tariff wherever they occur, the words "value of supply" shall be substituted: (B) the Explanation shall be omitted: (c) for item (v). and the entries relating thereto in columns (3). (4) and (5). the following shall be substituted, namely :- (3) (4) (5) "(v) Supply, by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, at Exhibition Halls. Events. Conferences, Marriage Halls and othe....
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....lying the service has not been taken [Please refer to Explanation (iv)] (vi) Accommodation, food and beverage services other than (i) to (v) above Explanation, (a) For the removal of doubt, it is hereby clarified that, supplies covered by items (ii). (iii). (iv) and (v) in column (3) shall attract central tax prescribed against them in column (4) subject to conditions specified against them in column (5), which is a mandatory rate and shall not be levied at the rate as specified under this entry'. (b) This entry covers supply of 'restaurant service' at 'specified premises' (c) This entry covers supply of 'hotel accommodation' having value of supply of a unit of accommodation above seven thousand five hundred rupees per unit per day or equivalent. (d) This entry covers supply of 'outdoor catering', provided by suppliers providing 'hotel accommodation' at 'specified premises', or suppliers located in 'specified premises'. (e) This entry covers composite supply of 'outdoor catering' together with renting of premises (including hotel, convention center, club, pandal. shamiana or any other place, speci....
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....ce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; (d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business; (e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members; (f) admission, for a consideration, of persons to any premises; (g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation: (h) activities of a race club including by way of totalisator or a license to book maker or activities of a licensed book maker in such club; and] (i) any activity or transaction undertaken by the Central Government, a Slate Government....
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....on 38 has not been restricted;] (c) subject to the provisions of ^4[section 41,^5[****]], the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and (d) he has furnished the return under section 39: Provided that where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment: Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed; Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount tow....
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....e same premises where the hotel rooms are situated; that the declared tariff [which means 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], throughout the year remains below Rs. 7,499/-. Further explanation (iv) to basic notification stales as under: (iv) Wherever a rate has been prescribed in this notification subject to the condition that credit of input tax charged on goods or services used in supplying the service has not been taken, it shall mean that,- (a) credit of input tax charged on goods or services used exclusively in supplying such service has not been taken; and (b) credit of input tax charged on goods or services used partly for supplying such service and partly for effecting other supplies eligible for input tax credits, is reversed as if supply of such service is an exempt supply and attracts provisions of sub-section (2) of section 17 of the Central Goods and Services Tax Act, 2017 and the rules made thereunder. 13. A conjoint reading of the fa....
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....CGST Act, 2017. The manner of determination of ITC in respect of inputs or input services and reversal thereof would clearly be governed by Rule 42 of the CGST Rules, 2017. Likewise, in the manner of determination of ITC in respect of capital goods and reversal thereof would clearly be governed by Rule 43 of the CGST Rules, 2017. 16. The applicant has stated that section 17 of the CGST Act, 2017 would not be applicable to the present case. However, we do not find any merit in the argument more so since we find that the argument is made ignoring explanation (iv) of the basic notification no. 11/2017-CT( Rate) dated 28.6.2017. 17. Moving on to the last question of the applicant, whether the provisions of Rule 42/43 of the CGST Rules, read with SGST Rules are not applicable to the claim of ITC of the applicant as the declared tariff of the hotel rooms never exceeds Rs. 7,499/- at any time during the year, we find that the same is already answered in para 15. The provisions of Rule 42/43 of the CGST Rules, read with SGST Rules are applicable to the claim of ITC of the applicant. 18. We would also like to rely on the judgement of the Constitution Bench of the Hon'ble Suprem....