In re Jewel Classic Hotels Pvt. Ltd. (GST AAR Haryana)
1. Whether catering of food, banquet facilities and combination of both (as per requirement of the customer) in self-owned marriage and party halls by Hotel Jewels (having all rooms below Rs. 7,500/-), Kunjpura Road, Karnal (A unit of Jewel Classic Hotels Pvt Ltd) is covered in Outdoor Catering taxable @ 5 % as per Notification No. 20/2019 Dated 30th September 2019?
Catering of food, banquet facilities and combination of both (as per requirement of the customer) in self owned marriage and party halls by M/s Hotel Jewels Classic Pvt. Ltd, is not covered in Outdoor Catering taxable @ 5 % as per Notification No. 20/2019 Dated 30th September 2019;
2. Whether Hotel Jewels is eligible to charge 5 % tax (as per Notification No. 20/2019 Central Tax (Rate) for providing outdoor catering at Hazuri Bagh (A party lawn & restaurant of M/s Jewel Classic Hotels Pvt. Ltd.)?
M/s Hotel Jewels Classic Pvt. Ltd is not eligible to charge 5 % tax (as per Notification No. 20/2019 Central Tax (Rate) for providing outdoor catering at Hazuri Bagh;
3. Whether the additional arrangements (in addition to foods, beverages & renting of premises) such as flower decoration, DJ, Dance Floor, Special cutlery, Electric/electronics items, arranging food/beverages of specific vendors, provided as ‘pure agent’ will be excluded from value of supply as given in Rule 33 of CGST Rules and thus no tax is required to be charge on them?
Since, the applicant does not satisfy the condition of being a ‘pure agent’ hence, the additional arrangements provided by the applicant (in addition to foods, beverages & renting of premises) such as flower decoration, DJ, Dance Floor, Special cutlery, Electric/electronics items, arranging food/beverages of specific vendors, will not be excluded from value of supply; thus, tax is required to be charge on them;
4. Further, to arrange these supplies, some supplies are procured from Unregistered Persons having no GST Registration. Whether there is any tax on the supplies arranged from these unregistered people to be paid by the applicant under the Reverse Charge mechanism or any other provisions of the HGST Act/CGST Act?
Tax on the supplies arranged from the unregistered people is not required to be paid by the applicant under the Reverse Charge mechanism until further notification is issued by the government in this regard which is applicable on the applicant;
5. Whether the extra bed forms part of the room tariff and liable to be charged as per various rates prescribed as per slabs given under Notification No. 11/2017-Central Tax (Rate), No. 13/2018-Central Tax (Rate) Dated 26th July 2018 and 20/2019 -Central Tax (Rate) Dated 30th September 2019 ?
The value of extra bed forms part of the value of supply and liable to be charged GST accordingly.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, HARYANA
1. Brief submission of the applicant:
1.1 The applicant is running three separate units at three separate locations, having separate management in following names:-
a. Hotel Jewels: Hotel Jewels has the facility of short-term hotel accommodation with 54 rooms all with tariff below Rs. 7,500/- (Rupees Seven Thousand Five Hundred per day per unit), banquet facilities, restaurant services, Bar, outdoor catering, etc. This hotel is located at Kunjpura Road, Karnal.
b. Hotel Noor Mahal: Hotel Noor Mahal has the facility of short-term hotel accommodation, banquet facilities, restaurant services, Bar, gym, parlour services, outdoor functions/events, and other misc. services. Hotel Noor Mahal is having some rooms for accommodation having tariff of more than Rs.7,500/- (Rupees Seven thousand five hundred rupees per room per day). This hotel is located adjacent to Sector 32, Urban Estate, Karnal.
c. Hazuri Bagh: This is a separate and new unit started by the applicant, in which facilities of party lawns with & without catering and restaurant services are provided. There is no room accommodation in this premise. This premise is located on the Village Road, near Sector 32, Karnal.
1.2 All the three units have separate management, i.e. all operations, sales, accounting are being done separately by each separate team. They have common ownership of the applicant M/s Jewel Classic Hotels Private Ltd. and have single GST Registration Number.
1.3 As mentioned above, applicant has two separate existing Hotel units (Hotel Jewels and Hotel Noor Mahal) and recently started a new unit namely Hazuri Bagh, a party lawn, to organise marriage functions, exhibitions or other events. Hazauri Bagh, will take outdoor catering services from Hotel Jewels (A separate unit, in which No ‘hotel accommodation’ is more than Rupees Seven thousand Five Hundred per unit per day).
1.4 The applicant conducts various parties, marriages and other events in all three units. In these marriages/events in addition of renting of premises & supplying food/beverages the customers demand some additional arrangements from applicant such as Flower decoration; Orchestra, Music DJ, dance floor; Special cutlery for serving food; Electronic & Electric items, such as Television for podcasting, projectors, heaters in winter etc.; Arrangement of food or beverages from specific vendors (such as ‘Café Coffee Day’ stall, or BTW snacks etc.); And any other requirements of the customer.
1.5 Regarding tax on supplies from Unregistered Persons, the applicant has submitted as under:-
Section 9 (4) of the CGST Act, 2017 before its amendment by The Central Goods and Services Tax (Amendment) Act, 2018 read as follows:-
9 (4).The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.
1.5.1 However, with a view to provide relief to registered persons, the Central Government issued Notification No. 8/2017 Central Tax (Rate) dated 28th June 2017, which exempted, w.e.f. 1st July, 2017, the intra-state supply of goods or services or both received by a registered supplier from whole of CGST, provided that the exemption would not be applicable where the aggregate value of such supplies of goods or service or both received by a registered person from any or all the suppliers, who is/or are not registered, exceeds five thousand rupees in a day.
1.5.2 In view of difficulties faced by registered persons in complying with above provisions, the Proviso to above Notification No. 8/2017 Central Tax (Rate) dated 28th June 2017 specifying the threshold limit of Rs. 5,000/- for exemption, was omitted vide Notification No. 38/2017 CT(Rate) dated 13th October, 2017.
1.5.3 The omission of proviso to Notification No. 8/2017 Central Tax (Rate) dated 28th June 2017in a way suspended the applicability of reverse charge u/s 9(4) of the CGST Act, irrespective of the amount of purchases.
1.5.4 This exemption was upto 31st March, 2018 as the Notification No. 38/2017 CT (Rate) also provided that the exemption contained in Notification No. 8/2017 Central Tax (Rate) dated 28th June 2017 supra as amended shall apply to all registered persons till the 31st day of March, 2018.
1.5.5 Government of India again suspended the applicability of provisions of Section 9(4) of the CGST Act till 30.06.2018 vide Notification No. 10/2018 — CT (Rate) dated 23.03.2018 and the same was again suspended till 30.09.2018 vide Notification No. 12/2018 — CT (Rate) dated 29.06.2018.
1.5.6 Again the said provisions were suspended till 30.09.2019 vide Notification No. 22/2018 — Central Tax (Rate) New Delhi dated 06.08.2018.
1.5.7 As a result of all these notifications put together, we could sum up that a registered person was exempted from payment of GST on the purchase of goods or services or both from an unregistered person upto 30.09.2019.
Applicability w.e.f.01.02.2019
1.6 The Government of India vide Notification No. 1/2019 rescinded Notification No. 8/2017 Central Tax (Rate) dated 28th June 2017. This notification came into force with effect from 1st day of February, 2019.
1.6.1 CBIC vide Notification No. 2/2019 — Central Tax dated 29th January, 2019 has notified 1st day of February, 2019, as the date on which provisions of the Central Goods and Services Tax (Amendment) Act, 2018 (31 of 2018) shall be applicable.
1.6.2 In section 9 of the principal Act, for sub-section (4), the following sub-section has been substituted,
(4) “The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to such supply of goods or services or both.”
1.6.3 A careful reading of newly substituted sub section 4 will show that provisions of reverse charge under this sub section would be made applicable to a “Specified Class of Registered Persons” in respect of supply of specified categories of goods or services or both received from an “Unregistered Supplier”.
1.6.4 Further it is submitted that Section 9(4) is applicable on the recipient of goods or services or both but in case of the applicant, he is neither supplier of the additional services nor is the recipient of the services, he is merely a pure agent arranging those supplies on behalf of the client. Thus, provisions of Section 9(4) are not applicable on us.
1.7 The applicant in its both Hotels provides short term accommodation services, in which sometime customer states that there will be three occupants in a single room. There are two methods of charging for three person’s occupancy:
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