In Re : Deepak And Co
GST
2018 (5) TMI 598 – AUTHORITY FOR ADVANCE RULINGS NEW DELHI – 2018 (13) G. S. T. L. 382 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULINGS NEW DELHI – AAR
Dated:- 28-3-2018
ADVANCE RULING NO. 02/DAAR/2018 And ORDER NO. 189/DAAR//2018
GST
MR. PANKAJ JAIN AND MR. VINAY KUMAR, JJ.
For The Applicant : Puneet Agrawal, Adv.
For The Revenue : Arun Nautiyal
RULING
Statement of Facts as per the Applicant:
The applicant has entered into agreements with IRCTC/Indian Railways, for supply of food and beverages (packed/MRP/cooked) to the passengers of Rajdhani Trains as also Mail/Express Trains. Pursuant to these agreements, the applicant is engaged in supplying of food on board the trains to the passengers travelling on these trains vide the menu approved by the Indian Railways/IRCTC. Likewise, the applicant is also engaged in supply of food items to passengers/public through food plaza/food stall on the railway station.
2. The different modus operan
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” as per which, meals are supplied to passengers. Food is supplied and served to the passengers and money for the same charged from the Indian Railways/IRCTC by the Applicant.
b. Further, in some cases, IRCTC supplies some items of dinner/lunch menu from its own base kitchens/approved sources, to be picked-up by the representative of the Applicant. The Applicant charges money for the same from the Indian Railways/IRCTC.
c. Also, it is mandatory for the Applicant to supply newspaper to the passengers. Railways is to pay to the Applicant with respect to said supply of newspaper, as the prices of thesejterns are also included in the fare of the ticket.
(C) SUPPLY OF FOOD ON BOARD THE MAIL/EXPRESS TRAINS
a. The menu of food items and the price at which the same are to be served on board the trains is defined by the Indian Railways/IRCTC. The applicant supplies food from its Pantry/storage as per the said defined menu to the passengers desiring to obtain the same as per the menu pri
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T of Delhi?
B. What is the applicable rate of tax on supply of newspaper as elaborated in the cases mentioned above?
4. Views of the Applicant:
(i) As per Entry in Column (3) at S. No. 7 of Notification No. 11/2017 – Central Tax (Rate) dated 28.06.2017 amended vide Notification No. 46/2017 -Central Tax (Rate) dated 14.11.2017, supply of any food article/drink in any manner, whatsoever, by a restaurant, eating joint, etc., for consumption on or away from the premises is taxable at the rate of 2.5% each under the CGST & Delhi GST. Thus, it is submitted that the supply of food from on Food Plaza/Food Stall falls under the above said category.
(ii) As per Entry in Column (3) at S. No. 7 of Notification No 11/2017 – Central Tax (Rate) dated 28.06.2017 vide Notification No. 46/2017 -Central Tax (Rate) dated 14.11.2017, supply of any food article/beverage in any manner, whatsoever, for consumption on or away from the premises is taxable at the rate of 2.5%. In this case, food is suppli
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hese services under S. No. 7 Entry (i) with the CGST rate applicable at 2.5% but the said activity seems to fall under the entry (v) as the said activities seems to be that of Outdoor Catering as the applicant is engaged by the railways in providing services in connection with supply of food and beverages in a place other than the applicant's premises. The applicable duty rate is 9% in this case.
With respect to supply of newspapers:
In respect of supply of newspaper is nil rated on account of being exempt vide entry S. No. 120 of Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017. Also newspapers fall under GST HSN Chapter 4902 which attracts Nil rate of duty.
6. RELEVANT NOTIFICATIONS:
The S. No. 7 (i), (v) & (ix) and Annexure of Notification No. 11/2017 -Central Tax (Rate) dated 28.06.2017 as amended vide Notification No 46/2017- Central Tax (Rate) dated 14.11.2017 and parallel Notifications issued under IGST and Delhi GST, reads as under:
S. No.
Chapter, Section
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t 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)]
Explanation:- For the purposes of this notification,-
(iv) Wherever a rate has been prescribed in this notification subject to the condition that credit of input tax charged on goods or services used in supplying the service has not been taken, it shall mean that,-
(a) credit of input tax charged on goods or services used exclusively in supplying such service has not been taken; and
(b) credit of input tax charged on goods or services used partly for supplying such service and partly for effecting other supplies eligible for input tax credits, is reversed as if supply of such service is an exempt supply and attra
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ver, 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.
9
Annexure: Scheme of Classification of Services
S. No.
Chapter, Section, Heading or Group
Service Code (Tariff)
Service Description
(1)
(2)
(3)
(4)
1
Chapter 99
&
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88
–
996339
Other food, edible preparations, alcoholic and non alcoholic beverages serving services nowhere else classified
7. The S.No. 120 of Notification No. 2/2017 Central Tax (Rate) dated 28.06.2017 and parallel Notifications of IGST and Delhi GST reads as under:
Schedule
S. No.
Chapter/Heading/Sub-heading/Tariff item
Description of Goods
(1)
(2)
(3)
120.
4902
Newspapers, journals and periodicals, whether or not illustrated or containing advertising material
DISCUSSIONS:
8. The applicant has submitted a copy of 'Letter of Award' dated 02.08.2016 issued by IRCTC to them for setting up of and to operate 'Fast Food Unit' at Old Delhi Railway Station on payment of specified annual licence fee. The applicant has submitted that food and beverages (packed/MRP/cooked) are supplied by them to passengers at the rates fixed by the Indian Railways/IRCTC. However, details of food and beverages supplied, the method of prices and details of services have not be
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m. The applicant is required to arrange necessary service gears and equipments including disposables viz. Service trays, paper napkins, tray mat, paper cup, thermo flask etc. for provision of onboard services. The applicant is also required to serve newspaper at a fixed rate of Rs. 2 per passenger. It is mandatory for the applicant to supply Rail Neer (Packaged Drinking Water) at rates fixed at Rs. 15 per bottle of one litre. The payment for on-board catering services is made by IRCTC to the Service Provider on agreed rates. The applicant is required to submit separate bills for supply of food item-wise and service charges. In the rates accepted by the IRCTC, separate rates for each item viz. Tea, Breakfast, Dinner supplied by the applicant and separate service charges are given for serving tea, breakfast, dinner, whether provided by the applicant or provided by IRCTC from their base Kitchens. In the invoices issued by the applicant to IRCTC, similarly separate rates of each item and t
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py of Master Licence agreement dated 05.01.2015 between North Eastern Railway and the applicant for provision of pantry car/catering services in Shiv Ganga Express Train. Under the scope of 'Catering services on Train' in the said agreement, it is mentioned that the applicant shall supply and service of fully cooked meals/food to passengers on demand viz. breakfast, lunch, dinner, snacks tea, coffee etc. These meals/food will be prepared, packed and transported from Railway approved/nominated/authorised kitchens. The food has to be prepared and supplied to passengers as per recipe framed by the Railways. The menus and rates for each item is fixed by the Railways. The applicant is also required to distribute/serve Rail Neer/Packaged Drinking Water at rates decided by the Railways. The food/meals are served by staff of the applicant. The applicant shall ovoid cooking food in the pantry car except snacks, ted, culTee etc. The standard tariff for each item has been fixed by Railway
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ies shall be treated as a supply of services, namely:-
(a) Works contract as defined in clause (119) of Section 2; and
(b) Supply, by of or as part of any service in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply of service is for cash, deferred payment or other valuable consideration.
14. The applicant has claimed that their supply is a composite supply and hence should be treated as supply of services. However, In view of the nature of supply involving several types of goods and services, it is important to determine whether the said supply is a composite supply or not. It is observed that separate values of supply of good and services are available in the case of supply of food and beverages on board the trains. 'Composite supply' is defined in Section 2 (30) of the CGST Act, 2017 as follows:
“composite supply” means a supply made by a taxa
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en issued by CBEC regarding “Composite Supply” under GST:
A composite supply would mean 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:
A works contract and restaurant services are classic examples of composite supplies, however the GST Act identifies both as supply of services and chargeable to specific rate of tax mentioned against such services (works contract and restaurants)
In respect of composite supplies (other than the two categories mentioned above), the need to determine the supply as a composite one, will arise, so as to determine the appropriate classification. It will be necessary to determine as to whether a particular supply is naturally bundled in the ordinary course of business and what constitutes principal supply in such
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ngle service which gives such bundle its essential character'
Illustrations:
* A hotel provides a 4-D/3-N puckuye with Ihefucilily of hieukfusl. This is a natural bundling of services in the ordinary course of business. The service of hotel accommodation gives the bundle the essential character and would, therefore, be treated as service of providing hotel accommodation.
* AS star hotel is booked for a conference of 100 delegates on a lump sum package with the following facilities:
* Accommodation for the delegates
* Breakfast for the delegates
* Tea and coffee during conference
* Access to fitness room for the delegates
* Availability of conference room
* Business centre
As is evident, a bouquet of services is being provided, many of them chargeable to different effective rates of tax. None of the individual constituents are able to provide the essential character of the service. However, if the service is described as convention service, it is able to capture th
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rovide similar bundle of services. For example, bundle of catering on board and transport by air is a bundle offered by a majority of airlines.
* The nature of the various services in a bundle of services will also help in determining whether the services are bundled in the ordinary course of business. If the nature of services is such that one of the services is the main service and the other services combined with such service are in the nature of incidental or ancillary' services which help in better enjoyment of a main service. For example, service of stay in a hotel is often combined with a service or laundering of 3-4 items of clothing free of cost per day. Such service is an ancillary service to the provision of hotel accommodation and the resultant package would be treated as services naturally bundled in the ordinary course of business.
* Other illustrative indicators, not determinative but indicative of bundling of services in the ordinary course of business are:
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ied by the applicant have separate values, no supply is principal supply and various components of supply are not naturally bundled. Accordingly, the contract between IRCTC and the applicant does not appear to be a composite contract for supply of good and services. Hence, Section 7(l)(d) of the CGST Act, 2017 and Point 6 of Schedule II of the said Act are not applicable. Hence, it is not possible to classify the whole contract as supply of services.
18. The Applicant has referred to the High Court of Delhi judgement dated 19.07.2010 in the case of IRCTC V/s Government of NCT of Delhi reported in 2010 (20) STR 437 (Del) to argue that supply of food on board the trains cannot be considered as outdoor catering service. It has been held by the Hon'ble High Court that providing of food, snacks and water to passengers on board trains is different from outdoor catering service. The IRCTC or passengers have no choice of articles or quantity served as the same is supplied as per menu fixe
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egant decor, uniformed waiters, good linen, crockery, cutlery and could even provide music and dance floor. Further, in outdoor catering, service element is much more as compared to service element in case of service provided by the Restaurant.
21. Hence, taxing authorities in each case have to ascertain whether a transaction is pure supply of goods or the same is or composite contract involving sale of goods and services and whether the said composite contract can be split into goods and services. They are also required to determine whether services are incidental to the supply of goods or whether services component is predominant in the contract.
22. The contention of the applicant that a train is covered under entry (i) of S.No. 7 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 being a restaurant, eating joint including mess, canteen is not acceptable as a train is a mode of transport and passenger travel in a train to go to various far away places they do not vis
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7 (i) of the said Notifications as claimed by the applicant. The supply of goods i.e. food, bottled water etc. shall be charged to GST on value of goods (excluding the service charges) at applicable rates as pure supply of goods, as the same have no element of service. The supply of newspaper is separately invoiced and hence it shall be at 'Nil” GST under S. No. 120 of Notification No. 2/2017- Central Tax (Rate) dated 28.06.2017 and parallel Notifications of IGST and Delhi GST.
24. In the case of supply of food and beverages (cooked/MRP/packed) on board the Mail/express trains by the applicant directly to the passengers as per the menu/rates fixed by IRCTC/Railways does not have any element of service and hence the same shall be considered as pure supply of goods and GST shall be charged on individual items at their respective applicable rates. The benefit of S. No. 7 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 vide Notification No. 46/2017 – Central Tax (Rate
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