Aerated Beverages in Restaurants taxable as Composite Service under GST

In re Summit Hotels & Resorts Private Limited (GST AAR West Bangal)

The Authority for Advance Ruling (AAR), West Bengal, examined the applicability of GST on carbonated drinks (aerated beverages) supplied by a hotel restaurant, either independently or as part of a meal. The applicant, Summit Hotels & Resorts Private Limited, operates a hotel offering accommodation, banquets, dining, spa, and other services. The hotel has an on-premises restaurant, considered a “specified premise” for the relevant financial year. The restaurant offers aerated beverages both as standalone orders and along with food, and these are listed in the menu.

The applicant sought advance ruling under Section 97(1) of the GST Act on two key questions:

1. The GST rate on aerated beverages supplied independently.

2. The GST rate on aerated beverages supplied as part of a composite supply with food.

Currently, the applicant charged GST at 28% plus applicable cess on aerated beverages and 18% on restaurant services. Customers, however, argued for 18% GST on aerated beverages as well. The applicant contended that aerated beverages, whether served alone or with meals, should be treated as part of a composite supply under Sections 2(30), 7, and 8 of the CGST Act, and Clause 6(b) of Schedule II.