Case Law Details
In re Loyal Hospitality Pvt. Ltd. (GST AAR Karnataka)
Loyal Hospitality Pvt. Ltd., operating under the brand ‘Kitchens @,’ offers comprehensive kitchen infrastructure and technology services to restaurant and food brands, referred to as Restaurant Partners. The company operates centralized remote kitchens equipped with essential infrastructure, including kitchen equipment, tools, utilities, and technological support. This setup allows Restaurant Partners to efficiently prepare and deliver their food products to customers. Loyal Hospitality charges an agreed service fee for providing these facilities.
One noteworthy aspect of this case is that Restaurant Partners are responsible for covering utility charges, including gas, electricity, water, and other operational expenses. However, the electricity and water connections are registered in the name of the landlord since the kitchens are situated in leased premises. Additionally, gas and other utilities are procured directly by Loyal Hospitality from third-party vendors.
The key question that prompted the application for advance ruling was whether the utility charges collected by Loyal Hospitality Pvt. Ltd. from its Restaurant Partners are subject to GST under the CGST/KGST Acts.
During the proceedings, the applicant had an opportunity for a personal hearing where they elaborated on their understanding of the issues related to GST implications on utility charges. However, in a subsequent communication dated 17.07.2023, Loyal Hospitality Pvt. Ltd. requested the authority to permit them to withdraw their application.
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