Restaurant services rationalized
By: – CA Akash Phophalia
Goods and Services Tax – GST
Dated:- 4-8-2018
Introduction
Supply of food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply is for cash, deferred payment or other valuable consideration has been classified as “supply of services” in entry 6(b) of Schedule II to the CGST Act 2017. The said service is further elaborated along with accommodation services in Notification No 11/2017-Central Tax (Rate) dated 28th June 2017 for proper classification and assignment of HSN/SAC codes to it. In the recent notification 13/2018-Central Tax (Rate) as issued on 26th July 2018 the said classification particularly in relation to restaurant services is redefined and this article aims to throw light on the impact of such change.
Amendment in the entry
Accommodation, food and beverage services are classified as serial no 7 to the Notification 11/2017 sup
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riff 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.
Will there be any change in tax rate if the amount charged is less than declared tariff- Even if the amount charged actually is lesser than the declared tariff then also the said service shall fall in this classification only. To put it differently, even if the actual charges charged are lesser then the published charges, the declared tariff shall be equivalent to published charges.
How to calculate the limit of ₹ 7500/- The declared tariff needs to be seen for per room per day.
Can we consider the declared tariff on daily basis – The declared tariff for different days can be different and in that case the classification shall also be different for different days. If the declared tariff on one day is ₹ 7500/- then the
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ed tariff of the said special suite to an amount below ₹ 7500/-, the said services shall again be classified in the above stated amended entry.
Whether the checking of declared tariff is to be done assessee-wise -The above mentioned classification is applicable on premises. Thus if an institution is having accommodation facility in different premises and declared tariff in one premises is below ₹ 7500/- per room per day and the declared tariff in the second premises is ₹ 8000/- per room per day, then the said assessee has to classify services of different premises differently, that is to say, for the first premise the classification shall be as per the amended entry mentioned above and the second premises shall not be classified in the amended entry as mentioned above.
Condition attached
The important conditions attached to this entry is that the assessee engaged in providing services falling under this entry shall not be eligible to avail of the input tax credit o
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