In Re: M/s. Coffee Day Global Limited,
GST
2018 (9) TMI 1042 – AUTHORITY FOR ADVANCE RULINGS, KARNATAKA – 2018 (17) G. S. T. L. 121 (A. A. R. – GST), [2019] 64 G S.T.R. 139 (AAR)
AUTHORITY FOR ADVANCE RULINGS, KARNATAKA – AAR
Dated:- 21-8-2018
AAR No. KAR ADRG 21/ 2018
GST
SRI. HARISH DHARNIA, AND DR. RAVI PRASAD. M.P. MEMBER
Represented by: Sri S Vishnumurthy, Chartered Accountant
ORDER UNDER SUB-SECTION (4) OF SECTION 98 OF CENTRAL GOODS AND SERVICE TAX ACT, 2017 AND UNDER SUB-SECTION (4) OF SECTION 98 OF KARNATAKA GOODS AND SERVICES TAX ACT, 2017
M/s Coffee Day Global Limited, 23/2, 6th Floor, Vittal Mallya Road, Bangalore – 560 001, having GSTIN number 29AABCA5291P1Z3, have filed an application, on 18.01.2018, for advance ruling under Section 97 of CGST Act,2017, KGST Act, 2017 & IGST Act, 2017 read with rule 104 of CGST Rules 2017 & KGST Rules 2017, in form GST ARA-01. They also enclosed copy of challan for Rs. 5,000/- bearing CIN number SBIN18012900060425
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ut tax credit and it would not apply in the circumstances if the supplier wants to avail input tax credit. If the restaurateur avail input tax credit, the transaction would get classified under Sl.No.35 of Notification No.11/2017 and chargeable to tax at 18% (CGST – 9% and SGST – 9%). Hence the restaurateur has the option of paying output tax @ 5% without availing input tax credit or paying output tax @ 18% by availing input tax credit. Therefore the applicant filed this instant application seeking advance ruling on the following issue:
“Whether the applicant is entitled to pay GST @ 18% (CGST-9% and SGST-9%) and claim input tax credit?”
PERSONAL HEARING: / PROCEEDINGS HELD ON 30.01.2018.
4. The Applicant submitted power of attorney, issued by Sri. Jayraj C Hubli, Director, M/s Coffee Day Global Ltd., authorizing Sri. S Vishnumurthy, Chartered Accountant to represent the applicant before the Authority for Advance Ruling in connection with the instant application for Advance Ruling.
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n the case of State of Kerala Vs Builders Association of India [(1997)104 STC 134 (SC)] = 1996 (11) TMI 355 – SUPREME COURT OF INDIA].
5.3 Holding the notification under reference as mandatory would render it being violative of Article 14 of the Constitution of India (which guarantees equality before law) and violative of Section 16(1) of CGST Act'2017, which provides for input tax credit.
5.4 Restaurants inside Five Star hotels will be eligible for input tax credit. This would mean that persons consuming it there would end up paying lower than what they pay in stand alone restaurants, which have to treat the tax paid on inputs & input services as cost of supplies being made.
5.5 Reduction is made by invoking the powers in Section 9, which does not confer any power to reduce the rate of tax.
FINDINGS & DISCUSSION:
6. We have considered the submissions made by the Applicant in their application for advance ruling as well as the submissions made by Sri. S Vishnumurthy, Chartered Acc
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ccommodation services provided by Hotels, Inn, Guest House, Club and the like
74
996312
Camp site services
75
996313
Recreational and vacation camp services
76
Group 99632
Other accommodation services
77
996321
Room or unit accommodation services for students in student residences
78
996322
Room or unit accommodation services provided by Hostels, Camps, Paying Guest and the like
79
996329
Other room or unit accommodation services nowhere else classified
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 deli
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umn (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 number 7 of the aforesaid Notification.
8.3 The entries at serial number 7 of the aforesaid Notification were amended through Notification No 46/2017 -Central Tax (Rate) dated 14th November, 2017 levying a central tax of 2.5% on restaurant services as provided by the applicant under the condition that credit of input tax charged on goods and services used in supplying the service have not been taken. The entry is reproduced below for ease of reference:
(ii) against serial number 7,-
(a) for item (i) in column (3) and the entries relating thereto in columns (3), (4) and (5), the following shall be substituted, namely:-
(3)
(4)
(5)
“(i) Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any ot
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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 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 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
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al 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
Other services
701
Group 99971
Washing, cleaning and dyeing services
702
999711
Coin-operated laundry services
703
999712
Dry-cleaning services (including fur product cleaning services)
704
999713
Other textile cleaning services
705
999714
Pressing services
706
999715
Dyeing and colouring services
707
999719
Other washing, cleaning and dyeing services nowhere else classified
708
Group 99972
Beauty and physical well-being services
709
999721
Hairdressing and barbers se
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als 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”, “Section” or “Heading”, wherever they occur, unless the context otherwise requires, shall mean respectively as “Chapter,
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r 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 Notification 46/2017 (para 7.3 above) relevant. The explanation clearly stipulates that '…..shall attract cen
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