Facts: M/s Coffee Day Global Limited is in the business of running restaurants under the name and style of Café Coffee Day where non-alcoholic beverages and food items are served. Notification No. 46/2017 – Central Tax (Rate) dated 14.11.2017 (“Notification No. 46”) provides that restaurants can pay GST @5% (CGST-2.5% and SGST-2.5%), provided they do not avail input tax credit (“ITC”) of the tax paid on input goods and services. On the other hand, Notification No. 11/2017 – Central Tax (Rate) dated 28.06.2017 (“Notification No. 11”) , at Sl.No.35, provides for levy of GST @18% (CGST-9% & SGST-9%) on supply of unclassified services and the suppliers are entitled to take ITC in the circumstances where they pay output tax.
Issue involved: Whether the applicant is entitled to pay GST @ 18% (CGST-9% and SGST-9%) and claim ITC?
Held: The Hon’ble AAR of Karnataka vide Advance Ruling No. KAR ADRG 21/ 2018 dated August 21, 2018 observed that Notification No. 11 indicates that food and beverage services fall under Heading 9963, Group 99633 and Service Code (Tariff) 996331. It is thus evident that the services rendered by the applicant are clearly defined under Heading 9963. The tax rate for the services under Heading 9963 is 5% (CSGT 2.5% and SGST 2.5%) in terms of Notification No. 46. The competing entry claimed by the applicant is Serial Number 35 of Notification No. 11 for which applicable tax rate is 18%. This entry is applicable for 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 and thus is not entitled to pay the GST @ 18% with ITC as the services being offered by the applicant are classified under a heading attracting GST @ 5%, without ITC.
Citation: [TS-451-AAR-2018-NT]