2018 (9) TMI 1042 – AUTHORITY FOR ADVANCE RULINGS, KARNATAKA – 2018 (17) G. S. T. L. 121 (A. A. R. – GST) – Input tax credit – rate of tax – restaurant services – applicability of N/N. 46/2017 dated 14.11.2017 – Whether the applicant is entitled to pay GST @ 18% (CGST-9% and SGST-9%) and claim input tax credit?
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Held that:- The classification of the services rendered by the applicant is, therefore, clearly defined under Service Code (Tariff) 996331. Notification No. 11/2017Central Tax (Rate) dated 28th June 2017 notifies the rate of central tax in column 4 on the intra-State supply of services of description as specified in column (3) of the Table in the notification, falling under Chapter, Section or Heading of scheme of classification of services as specified in column (2) – The restaurant services provided by the applicant are squarely covered under serial number 7 of the aforesaid Notification.
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Explanation given in Notification 46/2017 makes it clear that 2.5% tax shall
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They also enclosed copy of challan for ₹ 5,000/- bearing CIN number SBIN18012900060425 dated 11.01.2018. 2. The Applicant is in the business of running restaurants under the name and style of Café Coffee Day where non-alcoholic beverages and food items are served. Notification No.46/2017 dated 14.11.2017 provides that restaurants can pay GST @5% (CGST-2.5% and SGST-2.5%), provided they do not avail input tax credit of the tax paid on input goods and services. Notification No.11/2017dated 28.06.2017, at Sl.No.35, provides for levy of GST @18% (CGST-9% & SGST-9%) on supply of unclassified services and the suppliers are entitled to take input tax credit in the circumstances where they pay output tax. 3. The Applicant contends that Notification No.46/2017 dated 14.11.2017 applies in circumstances where the applicant does not avail input tax credit. It does not prevent a restaurateur from paying tax at 18% (CGST – 9% and SGST – 9%) and availing input tax credit. Therefore t
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hority for Advance Ruling in connection with the instant application for Advance Ruling. 5. The authorized representative Sri. S Vishnumurthy, Chartered Accountant appeared for personal hearing proceedings and submitted written arguments inter alia stating as under: 5.1 Section 16(1) of the Act confers a right to every registered person paying regular rate of tax to take input tax credit. The said right is conferred by the statue and can not be taken away by a notification. Statutes are framed by the Parliament and notification is issued by the Government. Parliament is superior to Government and therefore, what is given by the Parliament cannot be taken away by the Government. 5.2 Under the Notification, availment of concessional rate of tax @5% is subject to the condition that the input tax credit is not availed. If the condition is not fulfilled, then the concessional rate will not apply. The phrase provided that signifies that a particular thing must happen before another thing can
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or advance ruling as well as the submissions made by Sri. S Vishnumurthy, Chartered Accountant during the personal hearing. We also considered the issue involved, on which advance ruling is sought by the applicant, relevant facts & the applicant s interpretation of law. 7. The Applicant, filed the application dated 18.01.2018 seeking for advance ruling, seeking clarification as to Whether the applicant is entitled to pay GST @ 18% (CGST @ 9% and SGST @ 9%) and claim input tax credit? 8. The applicant is engaged in, as already discussed in Para 2, the business of running restaurants where food and non-alcoholic beverages are served. 8.1 The supply of food and beverage services is covered under Heading 9963 and Group 99633 as per Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 read with the Annexure to the said Notification. The said entries of the Annexure are reproduced below for reference: 71 Heading 9963 Accommodation, food and beverage services 72 Group 99631 Accom
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ion halls, events, marriage halls and other outdoor/indoor functions 85 996335 Catering services in trains, flights and the like 86 996336 Preparation or supply services of food, edible preparations, alcoholic and non-alcoholic beverages to airlines and other transportation operators 87 996337 Other contract food services 88 996339 Other food, edible preparations, alcoholic and non-alcoholic beverages serving services nowhere else classified The classification of the services rendered by the applicant is, therefore, clearly defined under Service Code (Tariff) 996331. Notification No. 11/2017Central Tax (Rate) dated 28th June 2017 notifies the rate of central tax in column 4 on the intra-State supply of services of description as specified in column (3) of the Table in the notification, falling under Chapter, Section or Heading of scheme of classification of services as specified in column (2). 8.2 The restaurant services provided by the applicant are squarely covered under serial numbe
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here 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. Explanation.- declared tariff 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. 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)]. ; We also find that in the same Notification the following explanation is provided: Explanation.- For the removal of doubt, it is hereby clarified that, supply, by way of or as part of any se
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s also contended that the concessional rate of 5 % (2.5% CGST and 2.5% SGST) is subject to the condition that the input tax credit is not availed. If the condition is not fulfilled then the concessional rate will not apply. They further contend that in the event the concessional rate does not apply then their services would be covered under Serial number 35 of Notification 11/2017-Central Tax (Rate) dated 28th June 2017. This would require them to discharge tax at the rate of 18% and also entitle them to avail input tax credit. 8.5 The entry at serial no. 35 of Notification 11/2017-Central Tax (Rate) dated 28th June 2017 is as follows: 35 Heading 9997 Other services (washing, cleaning and dyeing services; beauty and physical well -being services; and other miscellaneous services including services nowhere else classified). 9 – The various services covered under the scope of Heading 9997 as per the Annexure to Notification 11/2017 are reproduced below for reference. 700 Heading 9997 Oth
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eeing to do an act 719 999793 Agreeing to refrain from doing an act 720 999794 Agreeing to tolerate an act 721 999795 Conduct of religious ceremonies or rituals by persons 722 999799 Other services nowhere else classified A reading of the above classification of services makes it clear that the applicant contends that his services shall fall under serial number 722 under the category of other services not elsewhere classified. 9. The question put forth by the applicant is Whether the applicant is entitled to pay GST @ 18% (CGST @ 9% and SGST @ 9%) and claim input tax credit? . The rate of tax is notified in Notification 11/2017-Central Tax (Rate) dated 28th June 2017. The scheme of the Notification is such that the rate of tax is described in direct conjunction with the classification of the service represented by the Chapter, Section or Heading under which the relevant service falls. Further the explanation given under serial number 4 of the notification reads Reference to Chapter , S
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is 18% for this entry. The extract of the entry is reproduced in para 7.5 above. This entry is applicable for services which are not specifically described under any other entry in the Annexure. The services provided by the applicant are classifiable under Heading 9963 and such services covered under heading 9963 are squarely covered under serial number 7 of the Notification. As the services provided by the applicant are covered under a specific heading and the Notification carves out a specific rate of tax for that heading, the same shall be applicable to the applicant. Serial number 35 would qualify for invocation only in respect of services that do not find classification elsewhere. Therefore the applicant is covered by serial number 7 and not 35. 9.2 In this regard the applicant has argued that the words provided that (refer para 7.3 above) give them an option to not to avail concessional rate of 5% and avail input tax credit. In this context we find the explanation given in Notif
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