2018 (5) TMI 598 – AUTHORITY FOR ADVANCE RULINGS NEW DELHI – 2018 (13) G. S. T. L. 382 (A. A. R. – GST) – Rate of GST – supply of food on board the trains – Nature of supply – Goods or services – outdoor catering services – composite contract – mixed supply – naturally bundled service – supply of food through food plaza on the railway platform (with A/C)/Food stalls on the railway platform (without A/C) – rate of tax on supply of newspaper – Held that:- 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.
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It is observed that the various goods and services supplied 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
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l 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 – the service charges are covered under Service Code (Tariff) 996335 in Group 99633 of heading 9963 of Annexure/Scheme of Classification of Services as “catering services in train”. The same are covered under S. No. 7 (ix) of Notification No. 11/2017 – Central Tax (Rate) dated 28.06.2017 as amended vide Notification No. 46/2017 – Central Tax (Rate) dated 14.11.17 and parallel Notifications of IGST and Delhi GST.
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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 – Held that: – here no element of service is involved 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 – benefit of notifications not allowed.
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Supply of foo
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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 operandi with respect to supply of food for human consumption on board a train are as follows: (A) SUPPLY OF FOOD THROUGH THE FOOD PLAZA ON THE RAILWAY PLATFORM (WITH A/C)/FOOD STALLS ON THE RAILWAY PLATFORM (WITHOUT A/C) a. In these places, food and beverages (packed/MRP/cooked) are supplied to the passeng
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y 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 price. Apart from the above, there are certain MRP items which are also supplied by the applicant. The same is supplied through the team of waiters which keeps moving in the train and takes orders and supplies the food items/beverages to the passengers and collect price from them. It is not compulsory for the passengers t
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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 supplied by waiters on premises of a running train. Thus, the supply of food falls under the above said category and is taxable under CGST @ 2.5 % and Delhi GST @ 2.5 %. IGST, wherever is applicable, is applicable at the rate of 5%. (iii) In respect of supply of newspaper, it is submitted that the same being exempt vide Entry at S
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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 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 ca
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or 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 attracts provisions of sub-section (2) of section 17 of the Central Goods and Services Tax Act, 2017 and the rules made thereunder. S. 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) (v) Supply, by way of or as part of any service or in any other manner whatsoever in outdoor catering wh
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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 All Services 71 Heading 9963 Accommodation, food and beverage services 80 Group 99633 Food, edible preparations, alcoholic and non alcoholic beverages serving services 81 996331 Services provided by restaurants, cafes and similar eating facilities including takeaway services, room services and door delivery of food 82 996332 Services provided by Hotels, Inn, Guest House, Club and the like including room services, takeaway services and door delivery of food 83
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ued 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 been submitted. 9. The applicant has also submitted a copy of agreement dated 29.09.2017 between IRCTC and the applicant for temporary licence to manage on board catering services on Rajdhani Express Train. The consideration for these services is included in the fare charged by Indian Railways from the passengers and the applicant is paid by Indian Railways/IRTC for the catering services provided to the passengers. Under the 'Scope of Work' in the said agreement, the applicant is required to provide catering services to the passengers as per the menu and instructions issued
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s 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 their respective service charges wherever applicable are separately mentioned. However, rates of newspaper, packed drinking water are fixed and no service charges are paid on the same. 10. In this case, there are three transactions, one between the passengers and the Indian Railways, second between Indian Railways and IRCTC and third between IRCTC and the applicant. We are concerned only with the third transaction in this case i.e. between IRCTC and the catering contractor. The applicant raises invoice to IRCTC showing separate value of food & beverages, newspaper and se
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rs 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 Railways. The payment is made by the passengers directly to the applicant. The applicant issues invoice for each item. As per sample invoice submitted by the applicant, they supplied, Biscuits @ ₹ 20, Namkeen @ ₹ 5, Tetra Juice @ ₹ 35, Flavoured Milk @ ₹ 25, Bread Pakoda @ ₹ 24, standard veg Breakfast @ ₹ 30, Tea (g> ₹ 7, Mutter Paneer @ ₹ 35 etc. No service charges were received by the applicant from the passengers over and above the fixed rates for each item. 13. It is observed that, for any supply to be covered in the said Not
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, 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 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; Illustration.- Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply; 15. From the above, it is observed that though a composite supply of various goods n
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x 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 composite supplies. The concept of composite supply under GST is identical to the concept of naturally bundled services prevailing in the existing service tax regime. This concept has been explained in the Education Guide issued by CBEC in the year 2012 as under: Bundled service means a bundle of provision of various services wherein an element of provision of one service is combined with an element or elements of provision of any other service or services. An example of 'bundled service' would be air transport services provided by airlines wherein an
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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 the entire essence of the package. Thus, the service may be judged as convention service and chargeable to full rate. However, it will be fully justifiable for the hotel to charge individually for the services as long as there is no attempt to offload the value of one service on to another service that is chargeable at a concessional rate. Whether the services are bundled in the ordinary course of business, would depend upon the normal or frequent practices followed in the area of business to which services relate. Such normal and frequent practices adopte
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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: – There is a single price or the customer pays the same amount, no matter how much package they actually receive or use – The elements are normally advertised as a package – The different elements are not available separately – The different elements are integral to one overall supply. If one or more is removed, the nature of the supply would be affected No straight jacket formula can be laid down to determine whether a service is naturally bundled in the ordinary course of business. Each case has to be individually examined in the backdrop of several factors some of
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CT 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 fixed by Railway Board. The passengers have no choice as to time and place of services of food. No refund is allowed if food provided is not accepted. No element of service is involved except heating and serving cooked food. Service element in providing food in this case is incidental and base minimum required for selling food. The impugned contract/transaction is not for providing service nor a composite contract but is one of pure sale of goods. Service component in respect of sale of food in a restaurant is much more than supply of food to a passenger in a compartment of a tr
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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 visit trains for the purpose of having food. The fact that food is consumed by them during their travel does not mean that a train should be considered as a restaurant or an eating joint. RULING 23. In the case of supply of food and beverages (cooked/MRP/packed), at defined menu and tariff, by the applicant to IRCTC/passengers on behalf of IRCTC, on board the Rajdhani/Duronto Express trains, the service charges are covered under Service Code (Tariff) 996335 in Group 99633 of heading 9963 of Annexure/Scheme of Classification of Services as catering services in train . The same are cov
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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) dated 14.11.2017; amendment made in Notification No. 8/2017- Integrated Tax (Rate) dated 28.06.2017 vide Notification No. 48/2017 -Central Tax (Rate) dated 14.11.17; amendment made in Notification No. 11/2017 – State Tax (Rate) dated 30.06.2017 vide Notification No. 46/2017 – State Tax (Rate) dated 28.11.17 are not admissible to the applicant. 25. The supply of food and beverages (cooked/MRP/packed) by the applicant to the passengers/general public at the rates fixed by the Indian Railways/IRCTC at food stalls at Railway platforms does not have any element of service and hence the sa
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