Hookah Not ‘Article for Human Consumption’: AAR Denies 5% GST as Restaurant Service

In re Indian Wire Products Company (GST AAR West Bangal)

The Authority for Advance Ruling (AAR), West Bengal, considered whether serving non-tobacco and tobacco-based hookah in a restaurant along with food would qualify as a supply of service under Clause 6(b) of Schedule II to the CGST Act, 2017 and attract GST at 5% applicable to restaurant services.

Also Read AAAR Order: Hookah Supply Not Restaurant Service: West Bengal AAAR

The applicant operates a restaurant under the name “Pappu Chaiwala” and is registered as a provider of restaurant services. It proposed to serve hookah—both herbal (non-tobacco) and tobacco-based—within the restaurant premises, alongside food and beverages. The applicant contended that hookah preparation involves a detailed process similar to food preparation and is part of a composite restaurant experience, including ambience and service. It argued that hookah qualifies as “any other article for human consumption” under Clause 6(b) of Schedule II and therefore should be taxed as restaurant service at 5%.

The Revenue opposed this view, contending that hookah flavours, particularly tobacco-based ones, fall under HSN 2403 11 10 and attract GST at 28% along with Compensation Cess. It argued that the principal supply in such cases is hookah flavours and not restaurant service, and that the concessional 5% rate applies only to supply of food or drink for human consumption, not tobacco products.