AAR order on GST rate applicable for Supply of Foods or Drinks in Restaurant for Consumption within or away

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Facts of the case:

The Cheaters, a restaurant operated by Applicant, is a restaurant located at J. W. Marriott Hotel, Mumbai where they are planning to start the business of providing the services of serving food and beverages for consumption.

The planned restaurant shall be a part of a retail arcade which is owned and operated by Mis. Chalet Hotel Limited. This arcade is located at The ORB, JW Marriott Hotel, Next to Intl. Airport, Mumbai. Ws. Chalet Hotel Limited also operates a hotel under the brand name “JW Marriott” on the same plot as the arcade.

The hotel, as well as the arcade, are owned and operated by Ws. Chalet Hotel Limited. There is inter-connectivity to the arcade from the hotel and vice versa via a private passageway between the hotel and the arcade. There is no need to exit the hotel premises to enter the arcade and vice versa as the main entry gate is common for both structures.

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There are no facilities for residence or lodging in the arcade. All such services are provided only on the hotel premises, which is the adjacent building to the arcade. JW Marriott Hotel offers rooms for lodging and boarding which have a declared tariff above Rs.7500 per day.

Interpretation of law:

An applicant has reproduced the relevant portions of amended Section 7 of the CGST Act 2017 for understanding the applicability of goods and services tax on their services.

The applicant has submitted that it is a well-established principle that food or beverages provided for consumption in restaurant premises are a “supply” and submitted that as per Clause 6, Sub-clause (b) of Schedule 11 the supply of food or drink (other than alcoholic liquor for human consumption), which is supplied whether as a service or otherwise, for cash or other consideration, is a supply of services under GST Laws.

An applicant has further reproduced the GST rate on restaurant service shall be 18% if the restaurant is located on the premises of a hotel or other places offering accommodation services having a declared tariff of Rs. 7500 or more for any unit in such places.

As per their interpretation, their restaurant shall be located on the premises of the arcade and not on the premises of the hotel. The arcade does not offer accommodation or lodging and boarding services in any part of the establishment.

Conclusions:

The Authority for Advance Ruling (AAR) bench constituting of Additional Commissioner, Vineetha Sekhar and Joint Commissioner, A A Chahure observed that applicant restaurant is located in the same premises as JW Marriot Hotel having rooms with a tariff of Rs. 7,500 and above, per unit/room per day or equivalent for any unit/room and applicant will be supplying food or drinks for consumption within the JW Marriot Hotel.

The Authority further provided that supply of food or drinks in a restaurant for consumption within the restaurant premises or away from the restaurant premises, where the restaurant located in the same premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes with a tariff at Rs.7,500 and above per unit/room per day or equivalent for any unit/room in the premises, the applicable rate of GST will be 18%.

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