TaxTMI 
TaxTMI 
TaxTMI 
ANALYSIS OF NOTIFICATION NO.20/19-CT (R) DATED 30.09.2019 VIZ-A-VIZ RECOMMENDATIONS OF 55TH GST COUNCIL MEETING IN RESPECT OF HOTEL & RESTAURANT SERVICES
X X X X Extracts X X X X
X X X X Extracts X X X X
....NALYSIS OF NOTIFICATION NO.20/19-CT (R) DATED 30.09.2019 VIZ-A-VIZ RECOMMENDATIONS OF 55TH GST COUNCIL MEETING IN RESPECT OF HOTEL & RESTAURANT SERVICES<br>By: - KASTURI SETHI<br>Goods and Services Tax - GST<br>Dated:- 6-1-2025<br><br>The GST Council in its 55th meeting held on 21.12.2024 has recommended to amend the definition of "declared tariff" and "specified premises" to link them with the actual value of supply of any unit of accommodation provided by the hotel and to make the GST rate on restaurant services in hotels dependent on the value of supply of units of accommodation in the preceding financial year i.e. i. 18% with ITC if the value of supply exceeded Rs. 7,500 for any unit of accommodation ii. 5% without ITC and provide an option for hotels to pay tax on restaurant services at 18% with ITC by giving a declaration at the beginning of the financial year or upon obtaining registration. The Council has recommended to implement above amendments w.e.f. 1.4.25 whereas such amendment should be implemented retrospectively in the interest of fair justice to the providers of hotel and restaurant services on the following grounds: - (i) &....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nbsp;The need for proposed amendment has arisen due to interpretation dispute between the department and tax-payers which resulted into issuance of show cause notices throughout India; (ii) The root cause of dispute revolves around the definition and scope of "specified premises" and "declared tariff" provided in Notification No. 20/19-CT (R) dated 30.09.2019. The department has differently interpreted the phrase, "any" unit of accommodation mentioned in the Explanation of 'specified premises' at serial no.7 of the Notification No.20/2019-CT (R) dated 30.09.2019 amending original Notification No.11/2017-CT (R) dated 28.06.2017. (iii) In Notification No.20/2019-CT (R) dated 30.09.2019 the word, 'ANY' does not signify 'ALL'. As per dictionary, the word 'ANY' has many meanings and one of them is 'one of several'. It is not in a plural sense as it can be restricted to a singular sense. The essence of the word, 'any' in the Notification in this context is a singular which means if any one room of the hotel is charged above Rs.7500/ - it is to be taxed @ 18% otherwise it will be taxed @ 5% and 12 % depending upon the room tariff. The word, 'ANY' must qualify to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the declared tariff whether below or above Rs.7500/- The word 'ANY' is not independent of the tariff declared. Therefore, it is worthwhile to go through the legal dictionary meaning, essence and message of the word, 'any'. (iv) As per The Law Lexicon, The Encyclopaedic Law Dictionary with Legal Maxims(Compiled and edited by P. Ramanatha Aiyar, published By Wadhwa and Company, Law Publishers, Nagpur, the word, 'any' may have one of several meanings, to the circumstances, it may mean "all"; each; every; some; "or one or more out of several". "Any" is not confined to a plural sense. "Any" is a word which excludes limitation or qualification; as wide as possible. 'Any' is used in the sense of anybody, any person. Any stands for one and not for all. (v) As per legal dictionary, 'Supreme Court Words and Phrases with Legal Maxims (judicially considered) (third edition) compiled by Surendra Malik and Sumit Malik and published by Eastern Book Company, Lucknow, the word, 'any' dictionary means "one or some or all. In Black's Law dictionary it is explained, "word 'any' has diversity of meanings and may be employed to indicate, 'all' or 'every' as well as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....'some' or 'one' and its meaning in a given statute depends upon the context and the subject matter of the statute". (vi) The word, "any" has meanings; some; one of many; an indefinite number, one indiscriminately of whatever kind or quantity. It is often synonymous with "either", "every" or "all". Its generality may be restricted by the context; (vii) The department is making out the meaning of phrase, 'any unit of accommodation' for 'ALL Units/rooms' of a hotel' and thus segregating this phrase from 'above seven thousand five hundred rupees' which is not correct. Here the term ANY UINT OF ACCOMODATION means that if any one of the unit of accommodation is charged above Rs 7500/- per day then it will attract GST @ 18%. It does not connote that even if one room is charged above Rs 7500/-, then all the rooms and services provided in the hotel will be charged @18% GST.The department is treating all the rooms in the category of above Rs.7500/- irrespective of the size of the room and amenities provided therein. The factum of 'off-season and peak-season' is also being brushed aside. Here, 'ANY' stands for one of several i.e. one of all those rooms where tariff h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as been declared above Rs.7500/-per day per unit and thus 'any' does not stand for ALL the units/rooms of a hotel including those rooms which fall under the category of 'other than specified premises'. Hence all the rooms of a hotel cannot be categorized as above tariff of Rs.7500/-. It is neither the intention of legislature nor the Govt. to drag the rooms falling below the tariff of Rs.7500/- per unit per day into the category of 'Specified Premises' i.e. above tariff of Rs.7500/- per unit per day thereby fetching revenue at highest rate of GST i.e.18%. The highest rate is not applicable to the category of tariff below of Rs.7500/- as clarified in the Explanation (a) (vi) at serial no.7 of the said Notification. (viii) The tax slabs for tariff below Rs.7500/- (other than specified premises)mentioned at serial no.7 (ii), (iii), (iv) & (v) of Notification are mandatary. These slab rates cannot be disturbed. In other words, GST rates mentioned specifically in the category of 'Other Than Specified Premises'' cannot be dragged into the category of 'Specified Premises'. If it is done so, that shall be in contravention of the provision of the Notification as well as Section 15 of the C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....GST Act. Hence it will be violation of the principles of Natural Justice/Fair Justice. The purpose of three slabs provided in the Notification itself will be defeated, if all the rooms of below tariff of Rs.7500/- are brought forcibly into the category of the tariff of above Rs.7500/-. All the rooms cannot be brought under one umbrella by any stretch of imagination. (ix) Further, Notification No.20/19-CT (R) dated 30.9.2019 cannot be read in isolation from Section 15 of CGST Act inasmuch as GST has to be paid on transaction value. Both are to be read conjointly for all purposes. It cannot be denied that GST has to be paid invoice-wise and room-wise and category-wise on transaction value. There is no ambiguity in the Notification. The declared tariff is meant for the purpose of categorization of rooms. (x) A notification cannot override the Act. It has been held by Hon'ble Supreme Court in the case of UOI Vs. Jalyan Udyog reported as 1993 (68) ELT 9 (56) which is extracted below for ready reference: - "Rules and notifications cannot override Act and cannot be derogatory to the object of the Act" Thus, it is amply clear that the department cannot go beyond Sect....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion 15 of CGST Act. The Notification has to be applied in consonance with the Act. (xi) The notification no 20/2019-CT (R) dated 30.09.2019 has done away with the declared tariff for the room accommodation and charging of GST has been made as per transaction value. Since the rate of tax is based on the declared tariff as per the tax invoice, it is specific and precise to those particular invoices. In case a few of invoices bear tariff of above Rs.7500/ per day per unit of accommodation, that cannot be generalised. (xii) Basically, tariff rates are variable, seasonal, and demand & supply based. Levy of tax is transaction as well as tariff centric. The fixing tariff is the choice of the hotel management keeping in view of the above factors/parameters. (xiii) As per the declared Tariff referred to above, the rooms are categorised as per the facilities provided, size of the room and other amenities. During the lean period these rates are reduced and during peak season the tariff rates sometimes go above this declared tariff. If the tariff of some or a few rooms during the peak season goes up and are charged Rs.7500/- and above, then the entire supply of hotel accom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....modation cannot be treated as more than Rs.7500/- and are covered under the definition of 'specified premises' as envisaged in the Notification No.20/19-CT (R) dated 30.9.2019. In this factual position transaction value is important and determinant factor. Each supply is to be determined as per invoice value and rate of GST is applicable on transaction value as discussed in the preceding paras. (xiv) It is pertinent to mention that a statute is stated to be edict of the legislature. To interpret the statute the best norm would be to give literal construction keeping the legislative intent of those who made/framed it. In view of the above of the above and in the interest of natural justice and fair justice, the proposed amendment deserves to be made effective retrospectively to cover up the period prior to 1.4.2025 and NOT from 1.4.2025. Such retrospective amendment will save the hotel and restaurant industry from the rigours of litigation which is avoidable.  ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....; Reply By Sadanand Bulbule as = Dear Sirji Kindly refer Notification No. 5/2025-Integrated Tax(Rate) dated 16/01/2025 and its impact on the subject covered under this esteemed article. Since the taxpayers engaged in this segment of business are at cross-roads, your views would clear the dark clouds as far as rate of tax is concerned with effective from 01/04/2025 which is interlinked to the room tariffs charged during the year 2024-25. Since time is running out, I solicit your views at the earliest possible in the interest of stake holders. Dated: 28-3-2025 Reply By Sadanand Bulbule as = Sirji Plz refer the following too: Notification No. 05/2025-Centra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l Tax (Rate) New Delhi, dated 16th January, 2025 Dated: 28-3-2025 Reply By KASTURI SETHI as = Sh.Sadanand Bulbule Ji, Sir, I agree with you. Both Notifications are integrally related now. I shall revert at the earliest. Warmest regards, K.L. SETHI Dated: 28-3-2025 Reply By KASTURI SETHI as = Sh. Sadanand Bulbule Ji, Sir, My further views on the issue are as under :- As per Notification No. 5/2025-CT (R) dated 16.01.2025, hotels charging above Rs 7500/- per room per night are required to charge GST @ 18% on room accommodation services as well as on the Food and Beverage Services and they can also claim ITC on Food & Beverage Services. On the other hand, the hotels charging room tariff below Rs. 7500/- per room per night are required to pay GST@12% and on Food and Beverage Services GST is chargeable @ 5% without ITC. This notification also gives option to the hotel industry to pay GST@18% on F&B services and avail ITC even if their room tariff is below Rs. 7500/-. For this they have to file a declaration in the format annexed with the notification to declare their premises as Specified Premises and then they can charge GST @18% on Food & Beverage Services with IT....
X X X X Extracts X X X X
X X X X Extracts X X X X
....C. Dated: 29-3-2025 Reply By Sadanand Bulbule as = Sirji Thank you for simplified explanation. Dated: 29-3-2025 Reply By KASTURI SETHI as = Sh. Sadanand Bulbule Ji, Sir, This is a burning topic. I also wish to be enriched by your original thoughts on this issue. In other words, not to be clouted by any legend or any court or any authority. Endless thanks. Dated: 29-3-2025 Reply By Sadanand Bulbule as = Dear Sirji There are many questions in this regard. 1. What is the logic behind interlinking the tariff charged in the preceding year-2024-25 to fix liability for future FY 2025-26? 2. There are hotels who have charged Rs.7500/- per room per day in exceptional cases, hardly in one or two occasions. Otherwise rest all other tariffs are not more than Rs.7500/- during the year 2024-25. They did this in the routine way without anticipating higher rate of tax @ 18% with ITC wef 01/04/2025. How far such interlinked tariff is justifiable in the eye of law? 3. The adverse impact of this is thst, walk-in customers to such hotels have to suffer additional 13% tax only on restaurant services. This is likely to damage the business arising out of walk-in....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... customers, who contribute massively. After 01/04/2025, such hotels might lose the repeat customers, party events etc. 4. Is interlinked tariff questionable in the court of law? So kindly offer your sagacious thoughts on these serious issues. I am aware that in taxation, the principle of "equity" has no place. Warm regards Dated: 29-3-2025 Reply By KASTURI SETHI as = Dear Sir, My comments are as under:- 1. What is the logic behind interlinking the tariff charged in the preceding year-2024-25 to fix liability for future FY 2025-26 ? Comments: The wording, 'preceding year' should be replaced by 'a year' 2. There are hotels who have charged Rs. 7500/- per room per day in exceptional cases, hardly in one or two occasions. Otherwise rest all other tariffs are not more than Rs. 7500/- during the year 2024-25. They did this in the routine way without anticipating higher rate of tax @ 18% with ITC w.e.f. 01/04/2025. How far such interlinked tariff is justifiable in the eye of law ? Comments : The whole house cannot be painted with the same brush. 3. The adverse impact of this is that, walk-in customers to such hotels have to suffer addit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ional 13% tax only on restaurant services. This is likely to damage the business arising out of walk-in customers, who contribute massively. After 01/04/2025, such hotels might lose the repeat customers, party events etc. Comments : You are absolutely right. This is total injustice. This is not the intention of the legislature. It is jingoism at the cost of fair justice. 4. Is interlinked tariff questionable in the court of law ? Comments : Yes. Constitutional validity can be challenged. Dated: 30-3-2025 Reply By Sadanand Bulbule as = Dear Sirji Happy greetings on the eve of Ugadi festival. Thank you very much for your meaningful clarification. Let the time decide the outcome of this scheme in favour of justice and ease of doing business without drilling further holes in the pockets of customers. Meals should not become means of more revenue! It's unpalatable. Dated: 30-3-2025 Reply By KASTURI SETHI as = Dear Sir, I also warmly reciprocate the same. Happy Ugadi festival. The whole issue revolves around the meaning of "ÄNY UNIT" whether the period of pre-Notification No.5/25-CT (R) or post-Notification. Either Govt. should amend or t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he matter will travel to the Supreme Court. "ÄNY" is being construed as ALL. The voice should be raised before the GST Council in order to avoid the save money, time and energy of the tax payers. Dated: 30-3-2025 Reply By Sadanand Bulbule as = True Sir. The stakeholders should lead the matter in the interest of their own protection. Dated: 30-3-2025 Reply By Sadanand Bulbule as = Sirji, in my opinion the application of higher rate of tax with effect from 01/04/2025 should not be given effect based on transactions which already stood concluded during the preceding year-2024-25. In the interest of ease of doing business, better only to be applied to actual transactions from 01.04.2025. Dated: 30-3-2025 Reply By KASTURI SETHI as = Sh.Sadanand Bulbule Ji, Sir, I am of the view that there is a flaw in Notification No.5/25-CT(R) dated 16.1,25 as it fails to delink Food & Beverages Services from the Accommodation Service which has led to confusion. If flaw is not removed, it will cause unnecessary litigation. I have come to know that Hotel Industry has already made representation to Central Govt. for delinking both services. Dated: 30-3-2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....025 Reply By Neha Rampuria as = Sir, Can you solicit your views on the following matter: Earlier also there was a notification issued by the department on 30/9/2020 clarifying that restaurants in specified premises would charge 18% tax rate. However again on April 2025 the govt has again asked for 18% tax on specified premises restaurants. Though there has been a change in the definition of specified premises but what remains the same is the tax rate . if you could drop some light on this and bring some clarity we would be highly obliged Why has the govt bringing the same thing i.e tax to be paid at 18% and if not wat is the difference between the 2 apart from change in definition of specified premises and tariff. People were charging 5% gst on restaurant services by issuing two separate bills to the customers one for the hotel and other for the restaurant. But after this notification does it mean that they cant charge 5% and give separate bills and have to mandatorily charge 18%. Dated: 23-4-2025 Reply By Sadanand Bulbule as = Dear Sir What I have gathered is, the restaurants located in the "specified premises" to retain the existing business are....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... forced to offer 10% discount on the net value of such services and then charge 18% tax to reduce the tax burden on the customers. Customers like the companies who frequently host large banquets are objecting for 18% tax, since ITC on restaurant services is blocked under Section 17 of the CGST Act. Earlier there was only 5% tax burden which was tolerable and now it is 18%. At once 13% hike in the cost, unbearable both to the restaurants and the customers as well. Ease of ding business remains the dream once again. Dated: 23-4-2025 Reply By Sadanand Bulbule as = Plz read is as " Ease of doing business" Dated: 23-4-2025<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....