IN RE: M/s. JABALPUR ENTERTAINMENT COMPLEXES P. LTD.,
GST
2018 (9) TMI 1644 – AUTHORITY FOR ADVANCE RULING, MADHYA PRADESH – 2018 (17) G. S. T. L. 690 (A. A. R. – GST), [2019] 60 G S.T.R. 31 (AAR)
AUTHORITY FOR ADVANCE RULING, MADHYA PRADESH – AAR
Dated:- 27-8-2018
Order No. 12/2018
GST
SHRI RAJIV AGRAWAL AND SHRI MANOJ KUMAR CHOUBEY MEMBER
Present on behalf of applicant: Shree Nikhilesh Mlshra , DGM and Shree Vishal Shreevastav Tax, Consultant
PROCEEDINGS
(Under section 98 of the Central Goods and Services Tax Act, 2017 and Madhya Pradesh Goods and Services Tax Act, 2017)
1. The present application has been filed u/s 97 of the Central Goods & Services Tax Act, 2017 and MP Goods & Services Tax Act, 2017 (hereinafter also referred to CGST Act and MPSGT Act respectively) by M/S. JABALPUR ENTERTAINMENT COMPLEXES P. Ltd., (hereinafter also referred to as applicant), registered under the Goods & Services Tax.
2. The provisions of the CGST Act and MPGST Act are ide
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Area Maintenance charges from tenants;
iii. Food Court – Operates a food court in the Mall, which is an air-conditioned area with self-serve (dine-in) and take away arrangements;
iv. SAM Retail – Operates a franchise apparel retail store within the Mall.
3.2 The Applicant is charging GST on outward supply of Goods & Services as under:
i. Sale of Movie tickets – @28% (on tickets exceeding Rs. 100/-) or @18% (on tickets below Rs. 100/-);
ii. Renting of Shops – @18%
iii. Common Area Maintenance Charges – @18%
iv. Sale of Food & Drinks – @5% (Without claiming ITC on food items and beverages purchased)
3.3 Further, the Applicant is claiming ITC of GST paid on following inward supplies of goods & services:
i. Movie Distributor Share Bill – Movie Distributor is raising a bill against revenue share of sale of movie tickets of every movie;
ii. Projector Rental Bills – The Applicant has taken a projector on rent for screening of movies;
iii. Advertising Bill – Relating to advert
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rticle 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 '
The Applicant is not providing residential or lodging accommodation services therefore rate of GST on food & drinks served by the Applicant is covered under the clause mentioned above. Therefore the Applicant is charging GST @5% on supply of food, drinks and & snacks from Food Court and Snack bar of Multiplex.
ii. As per Section 16(1) of the CGST Act, “Every registered pe
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ovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course of furtherance of business.
Explanation: For the purpose of clause (c) and (d), the expression “construction includes re-construction renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property;”
The inward supply of goods and services as mentioned in the questions 2 and 3, is for the purpose of maintenance & renovation of building and it is not capitalized in the books of accounts. These expenses are revenue in nature and hence full ITC can be claimed.
4 QUESTIONS RAISED BEFORE THE AUTHORITY:
The following questions have been posed before the Authority, with reference to the activity undertaken by the Applicant:
4.1 Whether GST @5% can be charged on food, soft drinks, and snacks sold in the Snack Bar & Food Court in terms of Notification no.46/2017;
4.2 Whether ITC of GST paid on Movie Distri
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t in terms of Notification no.46/2017?
It has been opined by the CGST department that in terms of relevant entry in the notification no.46/2017, the supply of food, drinks & snacks etc. Served by the Applicant at their own Mall, without providing lodging and accommodation services, shall attract GST @5% and no Input Tax Credit shall be available to the Applicant.
5.2 Whether ITC of GST paid on Movie Distributor Revenue Share Bill, Projector Rental Bill, Advertisement Bill, Security Agency Bill and Housekeeping Bill can be claimed in full?
It has been opined that in view of the facts and circumstances about the output services being provided by the Applicant through their four Divisions, Viz. Multiplex Division, Renting Division, Maintenance Division and Food Court, it appears that ITC on aforementioned Input Services would be admissible to the Applicant because the said input supply of services appear attributable towards their outward supply of services for furtherance of their bus
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in respect of the following, namely:
(a)…………
(b)…………
(c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service;
(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.
Explanation.For the purposes of clauses (c) and (d), the expression “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property;
Thus, it is clear from clause (d) above, that no ITC shall be admissible to the Applicant in respect of goods or services or both received by a taxable person for construction/maintenance of an immovable property. In the instant case, the applicant h
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pplicant is not availing such ITC for providing output works contract service, therefore it appears that the applicant is not entitled to avail ITC and any ITC so availed needs to be reversed by the Applicant.
6 RECORD OF PERSONAL HEARING:
Shri Shree Nikhilesh Mlshra, DGM and Shree Vishal Shreevastav, Tax Consultant, appeared on behalf of the applicant and reiterated the submissions already made in the application. Subsequent to PH, the Applicant also submitted additional write-up on 09.07.2018 giving further details in furtherance of their extant application. The same are briefed as under:
A. Process description of Restaurant services: The Applicant submitted that they mainly selling popcorn, cold drinks, sandwiches, tea & coffee etc. in the Snack Bar for which they have the facility of electric fryers, grillers, warmers, dispensing machine etc. These items are served in disposable plates/glasses etc.
B. For movie show exhibition they have an agreement with V N Exhibitors who char
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these questions one by one to arrive at conclusion.
7.3 The first question reads, “Whether GST @5% can be charged on food, soft drinks, and snacks sold in the Snack Bar & Food Court in terms of Notification no.46/2017- Central Tax (Rate)?'. On a careful consideration of the legal position under the GST law, we find that the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 further amended by Notification No.46/2017-Central Tax (Rate) vide entry at Serial Number 7 and corresponding notifications issued under MPGST ACT ,2017, squarely covers the services provided by the Applicant at item no.(i) which reads:
'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 wh
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utdoor Catering. The term 'Outdoor Catering' was defined under Section 65(76)(a) of the erstwhile Finance Act 1994 as “Outdoor caterer means a caterer engaged in providing service in connection with catering at place other than his own but including a place provided by way of tenancy or otherwise by the person receiving such service”. On considering the common parlance meaning of 'Outdoor Catering' and its above definition for Service Tax, we come to the conclusion that the supply of food, soft drinks and snacks sold in the Food Court or Snack Bar of the Applicant cannot by any stretch of imagination, be treated as a part of outdoor catering. In view of the facts and circumstances, we are of the view that the services provided by the Applicant in Snack Bar would be classifiable under SAC 9963 and chargeable to GST @ 5% (CGST @2.5% + SGST @2.5%), provided they fulfill the conditions laid down under Notification 46/2017-Central Tax (Rate) and corresponding notifications i
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roviding exempted supplies shall be subject to reversal in terms of Section 17(1) of the GST Act, 2017. To illustrate, Security Services and Housekeeping in particular shall be utilized for Snacks Bar and Food Court also and hence ITC on such services would be available partially in terms of provisions of Section 17(1) of the GST Act, 2017.
7.5 Now moving on to the third question posed before the Authority, we observe that the question is; 'Whether ITC on GST paid on goods purchased for the purpose of maintenance such as Vitrified Tiles, Marble, Granite ACP Sheets, Steel Plates, TMT TOR, Bricks, Cement, Paint, Chemicals, Sanitary items like wash basin, urinal pots, and toilet accessories can be claimed in full?'.
The Applicant has been purchasing the materials under question for the purpose of utilising the same in maintenance/renovation of the Mall building. Broadly speaking, the extant law i.e. the GST Act 2017 prohibits such ITC in terms of clause (d) of Section 17(5) whic
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. Explanation to the sub-section (5) has defined the term 'Construction' to encompass all the activities '…….to the extent of capitalization to the said immovable property.' Going by the said definition it has been argued that ITC of materials used for maintenance can be claimed in full if the cost of maintenance is not capitalized. We find that capitalization of expenditure depends on the nature of expenditure and the period of benefit from such expenditure. However, the Application falls pretty short in elucidating the nature of expenditure i.e. capital or revenue. Thus we are constrained to reach any definitive conclusion on this argument. Mere statement that expenditure is not capitalized cannot come to the rescue of Applicant. Be that as it may, the eligibility of ITC does not depend on the treatment given to the expenditure. If the expenditure is revenue in nature but subsequently capitalized in the books of account it would not make Applicant eligible to ITC on s
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of Section 16 and sub-section (1) of Section 18, Input tax credit shall not be available in respect of the following, namely:
(a)…………….
(b)…………….
(c) works contract service when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service,
Thus we do not find anything for us to discuss and deliberate on this issue. It is admittedly clear that Works Contract Service which the Applicant intends to engage is for the civil work etc. for repair/renovation/maintenance of Mall building. Such service is fully consumed at the end of Applicant and it is not an input service for further provision of output service as Works Contract. That being the case, we have no hitch in concluding that ITC in respect of Works Contract Service utilised by the Applicant for repair/renovation/maintenance of Mall building shall not be available to them.
7.7 Having regard to the discussi
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