GST update on food catering, banquet etc. provided in self-owned marriage and party halls by separate entities under common ownership covered under ‘outdoor catering’

The taxability of hotel industries has been subject to complexities and dispute since the inception of the indirect taxes. The same sees to continue in GST regime. Whether catering of food, banquet facilities and combination of both in selfowned marriage and party halls is covered in Outdoor Catering and what is the GST Rate? This issue was recently raised before the Advance Ruling in the case of M/S Jewel Classic Hotels Pvt. Ltd. and same shall be discussed in our current update. The Appellant is running three separate units at three separate locations, having separate management, i.e. all operations, sales, accounting are being done separately by each separate team. The Appellant has conducted various parties, marriages & other events and such other custom services were also provided on demand basis. The appellant has taken services from another hotel on which is also owned by appellant. Here Hotel Jewels and Noor Mahal are not distinct persons. Address of Hotel Jewels mentioned as Principal Place of Business and Noor Mahal address mentioned as the additional place of business and both are owned by the same owner i.e. M/s Hotel Jewel Classic Pvt. Limited under the same GST registration number. The first question raised by applicant was whether catering of food, banquet facilities and combination of both in self-owned marriage and party halls by hotel covered in Outdoor Catering taxable @ 5 % as per Notification No. 20/2019 Dated 30th September 2019? Further in the premises of Hotel Jewels, there is no unit of accommodation above Rupees seven thousand five hundred rupees per unit per day. Whether rate of 5% will be applicable on same? For this AAR ruled that since the hotel jewels and Noor Mahal are not distinct persons. The hotel Jewels is the principal place of business and Noor Mahal is the additional place of business and both are owned by the CA. PRADEEP JAIN ??www.capradeepjain.com??pradeep@capradeepjain.com??7 same owner i.e. M/s Hotel Jewel Classic Pvt. Ltd. under the same registration number. Further AAR said that in order to qualify for the outdoor catering services the supply of outdoor catering should not be provided by such suppliers who are providing 'hotel accommodation' at 'specified premises'. ln the present case, the applicant is providing hotel accommodation at Noor Mahal which is a specified premises. Thus, the applicant does not fulfill the condition. Thus, the same does not qualify for the outdoor catering taxable at 5%. Second question raised by applicant was that Hotel Jewels is providing outdoor catering at Hazuri Bagh which does not fall under the definition of Specified premises, hence the condition given in Notification is satisfied and thus Hotel Jewels is justifying in charging 5% GST. AAR stipulated that there are certain conditions to be satisfied in the above case such as where the supply of outdoor catering services should not be at specified premises and Hazuri Bagh is situated under the business premises of Noor Mahal Hotel, second unit of the above said taxpayer which is a specified premise. Therefore, the taxpayer is not entitled to supply @ 5% The third and last question asked was Whether the additional arrangements such as flower decoration, DJ, Dance Floor, Special cutlery, Electric/electronics items, arranging food/beverages of specific vendors, provided as ‘pure agent’ will be excluded from value of supply as given in Rule 33 of CGST Rules and thus no tax is required to be charge on them? For this, AAR ruled that the applicant has mentioned in its application that they take nominal/facilitation charges whether any liability to pay tax under GST arises or not. As per valuation rule provision of GST Act, 2017, the taxpayer does not satisfy the condition of the pure agent. The recipient should recover such amount as paid by him to the third party. Facilitation charges collected by him shall disqualify taxpayer from being pure agent. It is important to mention here that AAR were formed with an intention to reduce the existing burden on judiciary and to fasten the process of relief in certain disputes to the CA. PRADEEP JAIN ??www.capradeepjain.com??pradeep@capradeepjain.com??8 assessee, but with the passage of time it seems that most decisions are in favour of GST department. This prorevenue approach is increasing the litigation in place of reducing the same. Hence, there is feeling that there is no benefit of going to AAR. It is unsettling the settled provisions. Even many consultants and departmental officers are of the view to ignore the decisions of Advance Rulings to reach a conclusion or to understand the legal position. Time and again, demand of inclusion of judicial members in this forum as well as constitution of national advance rulings is being raised.

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GST update on food catering, banquet etc. provided in self-owned marriage and party halls by separate entities under common ownership covered under ‘outdoor catering’

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