Case Law Details

Case Name : In re Mangaldas Mehta and Co. Limited (GST AAR Gujarat)
Appeal Number : Advance Ruling No. GUJ/GAAR/R/2019/15
Date of Judgement/Order : 28/08/2019
Related Assessment Year :

In re Mangaldas Mehta and Co. Limited (GST AAR Gujarat)

The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017 [herein after referred to as “the CGST Act” and GGST Act”] by M/s. Mangaldas Mehta and Co. Limited, House of MG, Opp. Siddi Saiyed Jali, Lal Darwaja, Ahmedabad, Gujarat-380001, the applicant, seeking an advance ruling in respect of the following question:

(i) Whether the invoice of the applicant containing items reflecting charges towards room stay, service charge, breakfast, airport pick up and drop, extra bed form a part of tariff in order to ascertain the rate of GST 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 offering a bouquet of services ?

(iv) 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- Central Tax (Rate) and not 18% GST?

(v) 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 as the tariff falls below Rs.7,500/- ?

(vi) The applicant has certain lower category of rooms wherein the tariff at which they are sold at includes break-fast. In this scenario, what will be the liability to pay GST on room tariff and breakfast in the event the applicant is liable to pay only 5% GST on restaurant services as tariff falls below Rs.7,500/- and low category rooms are sold at Rs.3,400/-?.

2. At the outset, we would like to make it clear that the provisions of both the CGST Act and GGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the GGST act. Further to the earlier, henceforth for the purpose of this Advance Ruling, the expression ‘GST Act’ would mean CGST Act and GGST Act.

3. Applicant’s Opinion

In their opinion, the Notifications issued in relation to the rate of 5% GST on restaurant are ambiguously worded. Before entering the labyrinth of queries, the applicant would like to refer to certain definitions provided under GST Act, clarifications issued and certain relevant parts of Notification.

What does Notification 46/2017- CGST (Rate) say ?

The text of the Notification No.46/2017- CGST (Rate) reads thus:

Description Rate Condition
“(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, 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 thousa.nd 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 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.

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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 seven thousand five hundred rupees and above per unit per day or equivalent shall attract central tax @ 2.5% without any input tax credit under item (i) above and shall not be levied at the rate as specified under this entry.”;

Certain definitions:-

  • Definition of declared tariff:

Under the GST Act, declared tariff for hotel accommodation is defined in Notification 46/2017 CGST(Rate) which reads as follows:-

“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.

  • Definition of Composite supply:

Section 2(30) defines Composite Supply and it reads as follows:-

(30) “composite supply” means a supply made 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) “mxed 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:

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 amount charged (transaction value).
2. What will be GST rate if cost goes up (more than declared tariff) owing to additional bed. 2. GST rate 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 from the customer. For example, if the declared tariff is Rs.7000 per unit per day but the amount charged from the customer on account of extra bed is Rs.8000, GST shall be charged at 18% on Rs. 8000.
3. Where will the declared tariff be published? 3. Tariff declared anywhere, say on the websites through which business is being procured or printed on tariff card or displayed at the reception will be the declared tariff. In case different tariff is declared at different places, highest of such declared tariffs shall be the declared tariff for the purpose of levy of GST.
4. Same room may have different tariff at different times depending on season or flow of tourists as per dynamic pricing. Which rate to be used then? 4. In case different tariff is declared for different seasons or periods of the year, the tariff declared for the season in which the service of accommodation is provided shall apply.
5. If tariff changes between booking and actual usage, which rate will be used? 5. Declared tariff at the time of supply would apply.
6. GST at what rate would be levied if an upgra.de is provided to the customer at a lower rate? 6. If declared tariff of the accommodation provided by way of upgrade is Rs.10000, but amount charged is Rs.7000, then GST would be levied @28% on Rs.7000/-.

The applicant humbly urges that in its opinion, the ambiguous notification and the clarification issued collectively enable the applicant to opt for rate of 5% GST for its restaurant business. The query-wise views of the appellant are stated below:-

Opinion in relation to query 1:

The applicant has offered the room by declaring the tariff which represents charges only towards hotel accommodation plus service charge. At the time of booking of room, the proposed customer/guest requests for an airport pick up and drop facility and also requests to add breakfast. Furthermore, when the guest comes to stay, the guest also eats meals at the restaurant of the applicant. In order to better understand the applicant presents an illustration as demonstrated below:

Illustration 1:

The break-up of the invoice comes as follows for one night stay i.e. 2 days and 1 night:-

Description oi service Amount (Rs.)[excludi ng 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 800 Ate dinner at restaurant
Heritage Walk 1800 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 as well as the clarification issued by the Hon’ble Ministry of Finance, the definition of the declared tariff will never ever include the charges of breakfast or airport pick up and drop as well as food bill. In this scenario, the liability of the applicant to pay GST on hotel accommodation i.e. Room stay plus service charge will be 18% GST.

Opinion in relation to query 2:

As demonstrated in illustration 1, the tariff of the applicant falls below Rs.7,500/- and hence, in the humble opinion of the applicant the applicable rate of GST on breakfast, food bill as well as restaurant services would be 5% GST in view of the Notification no. 46/2017- CGST (Rate).

Opinion in relation to query 3:

In relation to query no. 3, many times the proposed guests of the applicant wants a variety of services and asks the applicant to provide a final price to the guest at the time of booking. The applicant gives a consolidated single figure to the proposed guest and also accepts money accordingly. However, when the applicant prepares an invoice upon check out from the hotel, the invoice would reveal separate prices for each service requested by the guest at the time of booking. An illustration would better clarify the situation.

Illustration 2: Single amount quoted to guest but invoice reflects specific items of services and money attributable to each such service:

Sr. No Particulars Amount (Rs.) [excl.GST] Remarks
A Amount quoted to proposed guest at the time of making a reservation for double occupancy. 14,000 Single price quoted includes charges for 1 night stay at hotel, breakfast, lunch, dinner, heritage walk, extra bed, and airport pick up and drop
B Invoice made at check out and contains following break up
a) Room stay plus service charge 7,400
b) Breakfast 1,000
c) Lunch 1,800
d) Dinner 1,800
e) Airport pick up and drop 1,000
f) Heritage Walk 800
g) Extra Bed for kid up to 10 years of age 200
Total amount charged excluding GST 14,000

The applicant states that each service is mutually exclusive and is optional for the guest to choose. The applicant is of the view that the tariff comprises only and only of Room stay plus service charge and hence, the liability to pay GST will be only 18% on hotel accommodation and not 28% GST. 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 the humble opinion of the applicant the applicable rate of GST on breakfast, food bill as well as restaurant services would be 5% GST in view of the Notification no. 46/2017- CGST (Rate).

Opinion in relation to query 5:

The applicant states its business is a seasonal business. Like stock markets, the price fluctuates of rooms. It may happen that the base tariff i.e. room stay plus service charge exceeds Rs.7,500/- for a few days during the year. The applicant states that the room tariff during the entire year however below Rs.7500/- and it is only for a rare few days that the tariff shoots up. In order to better explain, the applicant presents a tabular illustration as below:

Illustration 3:

Tariff fluctuations and entangled rates:

Period Tariff for rooms Season
1st April to 30th Sept Below Rs.7500 Low season
1st October to 31st Jan Above Rs.7500 High Season
1st Feb to 31st March Below Rs.7500 Low season

As per the Notification No. 46/2017 CGST (Rate), when the tariff of the hotel is in excess of Rs.7500/-, the liability to pay GST on restaurant arises at 18% and in other cases, it is 5% GST. The Notification is absolutely silent on the liability of GST in the event the tariff remains below Rs.7500/- for a part of the year and exceeds Rs.7,500/- during the year mid way or exceeds Rs.7,500/- for a few months and falls back below Rs.7500/- again during the same year. It is very pertinent to note that the tariff is not decided at the start of the year. The tariff gets changed like airline rates.

In the humble opinion of the applicant, at the start of the year, it doesn’t know whether it will be able to sell the rooms at a tariff exceeding Rs.7,500/-. This leads to a treacherous situation in the event the tariff exceeds Rs.7,500/- on a single day during the year. According to the applicant, from the day the tariff exceeds Rs.7,500/- it is liable to pay 18% GST on restaurant services and shall continue to do so for the period the tariff exceeds Rs.7500/-. As soon as the tariff falls back below Rs.7500/-, the applicant’s liability to pay GST on restaurant services shifts back to 5% GST. In any case, the liability to pay GST at 18% can never have a retrospective applicability.

The applicant further states that when two views are possible one favouring 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 charges 5% GST on restaurant services and the applicant shows a separate item as charges for breakfast it must be ordered to be liable to pay 5% GST on breakfast and not 12% GST.

4. Statement of facts of the case submitted by applicant vide Annexure to Form GSTR ARA-01:

1. The applicant runs a boutique hotel as well as restaurant.

2. The applicant charges tariff for room stay from the customers based on the seasons.

3. The applicant is charging 18% GST on restaurant services.

4. The applicant charges rate of GST on room stay as per the slabs provided on declared tariff.

5. 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

> Heritage Walk

6. In many cases, the sum total of the items stated in point no. 5 exceeds Rs. 7500/-.

7. As is evident, the services of break-fast, airport pickup-drop, extra bed, laundry, lunch/dinner are all optional services and are independent in nature and have no bearing with room stay.

8. Recently, the Government has issued a Notification No. 46/2017 dated 14th November, 2017 whereby the rate of restaurant services was revised from 18% to 5% subject to certain conditions.

9. Furthermore, on 4th January, 2018, a Circular vide F. No. 354/107/2017-TRU was issued whereby certain clarifications were issued about inclusion of tariff and applicable rate of GST.

10. The restaurant of the applicant and hotel are in the same premises. Needless to say there are clearly demarcated areas and sections whereby the restaurant area is different and room stay area is different in the premises.

5. The Central Goods and Services Tax, Ahmedabad South Commissionerate, vide their letter dated 18.05.2018, submitted the point wise reply regarding the queries raised by the Applicant, as under:-

1. It is to submit that the as per reply received from the Proprietor of the company and it is noticed that presently their manufacturing activity is going on i.e. (activities are running).

2. Question/issued raised in the application are whether pending or decided in any proceedings in the 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

> Heritage Walk

8. We further find that their declared tariff represents only the charges for room stay plus service charges. The services of breakfast, airport pick up & drop, extra bed, laundry, lunch/dinner and heritage walk are optional and one may or may not choose to avail these other amenities/additional services. Accordingly, the Applicant collects separate prices for each service availed by the guest in the invoice issued by them, upon check out from the hotel. 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. The Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended provides different rates for different types of services. The rate of GST for each distinguished service provided by the Applicant shall be determined according to the respective entries of said Notification.

‘Accommodation, food and beverage services’:

9. We find that the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended issued under the Central Goods and Services Tax Act, 2017 (herein after referred to as the ‘CGST Act, 2017’) and Notification No. 11/2017-State Tax (Rate) dated 30.06.2017, as amended issued under the Gujarat Goods and Services Tax Act, 2017 (herein after referred to as the ‘GGST Act, 2017’) provides different rates for different types of services under ‘Accommodation, food and beverage services’ of Heading 9963. The part of the said Sr. No. 7 of the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, as amended [up to 14.11.2017 vide Notification No. 46/2017-Central Tax (Rate)], 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)
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, 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)]
(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 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. 6
(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 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 -]
(iv) ***** * *]
(v) 9
(vi) 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 two thousand five hundred rupees and above but less than seven 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 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.

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(vii) 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.

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

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(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 seven thousand five hundred rupees and above per unit per day or equivalent shall attract central tax @ 2.5% without any input tax credit under item (i) above and shall not be levied at the rate as specified under this entry.

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10. We also find that the Government of India, Ministry of Finance, Department of Revenue (Tax Research Unit), vide Circular No. 27/01/2018-GST dated 04.01.2018 (Issued from F. No. 354/107/2017-TRU), has issued clarifications on certain issues regarding levy of GST on supply of services. Relevant extract of the same is reproduced herein 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 amount charged (transaction value).
2. What will be GST rate if cost goes up (more than declared tariff) owing to additional bed. 2. GST rate 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 from the customer. For example, if the declared tariff is Rs.7000 per unit per day but the amount charged from the customer on account of extra bed is Rs.8000, GST shall be charged at 18% on Rs. 8000.
3. Where will the declared tariff be published? 3. Tariff declared anywhere, say on the websites through which business is being procured or printed on tariff card or displayed at the reception will be the declared tariff. In case different tariff is declared at different places, highest of such declared tariffs shall be the declared tariff for the purpose of levy of GST.
4. Same room may have different tariff at different times depending on season or flow of tourists as per dynamic pricing. Which rate to be used then? 4. In case different tariff is declared for different seasons or periods of the year, the tariff declared for the season in which the service of accommodation is provided shall apply.
5. If tariff changes between booking and actual usage, which rate will be used? 5. Declared tariff at the time of supply would apply.
6. GST at what rate would be levied if an upgrade is provided to the customer at a lower rate? 6. If declared tariff of the 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. From the above, we also find that GST Rate for ‘Supply of food and beverage services by restaurants in hotel premises’ would also be determined according to declared tariff for the room, and GST at the rate so determined would be levied on the amount separately charged, for services of breakfast, lunch & dinner, 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:

1. Restaurants in hotel premises having room tariff of less than Rs.7500/-per unit per day will attract GST of 5% without ITC.

2. 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.

‘Passenger transport services’:

13. 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 provides different rates for different types of services under ‘Passenger transport services’ of Heading 9964. The part of the Sr. No. 8 of the Notification No.11/2017-Central 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)
8 Heading 9964 (Passenger transport services) (i) ………………..;

(ii) ………………;

(iii) ……………………;

(iv)……………..;

(v)……………..;

(vi)………………….;

(vii) Passenger Transport services other than (i), (ii), (iii), (iv), (v), & (vi) above.

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13.1 The applicant supplies the services of ‘Airport pickup and drop’ to the guests/ customers and charges amount separately for Airport pickup and drop services from gusts, which shall be taxable under ‘Passenger transport services’, as mentioned above. The HSC code (Tariff Group/ Heading) for the supply of the ‘Passenger transport services‘ by hotel shall be 996412. This service accounting code includes Passenger transport services by motorized taxi within or between urban and suburban areas. The rate of GST for these services will be 18% with ITC, as mentioned above.

‘Other Services’:

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.11/2017-Central 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:

RULING

Question-1: Whether the invoice of the applicant containing items reflecting charges towards room stay, service charge, breakfast, airport pick up and drop, extra bed form a part of tariff in order to ascertain the rate of GST 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 ?

Answer: Declared or published tariff is relevant only for determination of the tax rate slab. GST Rate for the ‘Supply of Accommodation, food and beverage services’ 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. The rate of GST for other distinguished service provided by M/s. Mangaldas Mehta and Co. Limited (GSTIN-24AAACM4217CIZ5) shall be determined according to the respective entries of the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, as amended. In present facts of the case, service-wise tax liability under GST will be as under:

(a) 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 charges, 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].

(b) GST Rate for ‘Supply of food and beverage services by restaurants in hotel premises’ would also be determined according to declared tariff for the room, and GST at the rate so determined would be levied on the amount separately charged, for services of breakfast, lunch & dinner, 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.c.’. The HSC code (Tariff Group/ Heading) for these services shall be 999799.

Question-2: 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 CGST (Rate)?

Answer: As mentioned above, declared or published room tariff is relevant only for determination of the tax rate slab. In case the Restaurant situated in a hotel premises having declared room tariff of less than Rs.7500/- per unit per day, M/s Mangaldas Mehta and Co. Limited (GSTIN-24AAACM4217CIZ5) will be liable to pay GST @ 5% without ITC on restaurant services to the guest who stays at hotel as well as to any outsider who comes just to eat at the restaurant. If declared tariff of any unit of accommodation of Rs.7500/- and above per unit per day or equivalent, applicant is liable to pay GST @18% on amount charged for restaurant services to the guest who stays at hotel as well as to any outsider who comes just to eat at the restaurant.

Question-3: 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 offering a bouquet of services ?

Answer: Declared or published room tariff is relevant only for determination of the tax rate slab in respect of the ‘Supply of Accommodation, food and beverage services’. If declared tariff of any unit of accommodation of Rs.7500/- and above per unit per day or equivalent, M/s Mangaldas Mehta and Co. Limited (GSTIN-24AAACM4217CIZ5) is liable to pay GST @28% on amount charged for room stay, extra bed (including service charges) from guest under service category of ‘Supply of Room or unit accommodation services by hotels’. Further, the Applicant is liable to pay GST @18% on amount charged for restaurant services i.e. for breakfast to the guest under category of ‘restaurant 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 as the tariff falls below Rs. 7,500?

Answer: In case different room tariff is declared for different seasons or periods of the year, the tariff declared for the season in which the service is provided shall apply. GST Rate would be determined according to declared tariff for the room, and GST at the rate so determined would be levied on the amount charged for restaurant services from the guest/customer.

Question-6: The applicant has certain lower category of rooms wherein the tariff at which they are sold at includes break-fast. In this scenario, what will be the liability to pay GST on room tariff and breakfast in the event the applicant is liable to pay only 5% GST on restaurant services as tariff falls below Rs.7,500 and low category rooms are sold at Rs.3,400/-?.

Answer: In case different tariff is declared for rooms, highest of such declared tariffs shall be the declared tariff for the purpose of levy of GST. If declared tariff of any unit of accommodation of Rs.7500/- and above per unit per day or equivalent, M/s Mangaldas Mehta and Co. Limited (GSTIN-24AAACM4217CIZ5) is liable to pay GST @28% on amount charged for room including breakfast (i.e. Rs.3400/-) from guest.

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