Question ID : 44598

GST RATE ON BANQUET HALL WHERE CHARGES TAKEN ON PER PERSON/PLATE BASIS

M/s ABC having banquet hall where they provide their hall for booking to customer and service charges taken on per plate basis however billing is being issued for Hall Rental charges only and GST charged @ 18% and claim ITC etc on input services . Now the GST department team visited at the premises and they asked to M/s ABC to reverse ITC earlier claimed and charged 5% GSTon their Billing (earlier billed also) due to Notification No 20/2019 dated 30 sep 2019 Querry : whether department contention is correct pl. guide with relevant support /ruling

Department contention of demanding GST @5% without ITC for composite supply of Banquet Hall + Catering services is valid w.e.f. 01st October 2019. Discussion made in 37th GST Council meeting: - The rate of taxation for composite supply of renting of a premise and catering therein may also be reduced to 5% without ITC from 18% - Thus, in order to address this differential tax treatment for same nature of supply and to provide uniform rate of tax on catering at all other places except in premises having declared tariff of Rs.7500/- or more per unit per day, we may prescribe GST rate of 5% without ITC for outdoor catering services. As a consequence, all kind of catering would get taxed at 5% without input tax credit, except in star hotels having tariff of Rs.7500/- and above Following two possibilities can be looked into; Before 01st October 2019: - Banquet hall + Catering is a composite supply of renting services and GST shall be discharged @18%, with ITC. After 01st October 2019: - Banquet Hall + Catering is a composite supply of catering services and GST shall be discharged @5% without ITC. In the instant case, if the entity has already remitted 18% GST on all the outward supplies, then it may not be correct, if GST Department demand to reverse the ITC availed and discharge only 5% on food. This matter is very much defendable, as this Notification is writing a deeming fiction of principal element in the COmposite supply in the case of Banquet + Food. As per the definition, Banquet shall be the principal element, however the Notification is deeming Catering as the principal element, this is ultra vires, as the Notification is overriding the Act. CESTAT Rulings in favour: SAYAJI HOTELS LTD. [2011 (24) S.T.R. 177 (Tri. - Del.)] HOTEL KANHA SHYAM [2019 (26) G.S.T.L. 71 (Tri. - All.)] Unfavourable AAR: JEWEL CLASSIC HOTELS PVT. LTD [2021 (48) G.S.T.L. 303 (A.A.R. - GST - Haryana)]