Page 52 - CA Final GST

Badlani Classes

Restaurants/ Caterers- “Exempt Services” not includible in computing
“Aggregate turnover” [Order No. 01/2017-CT dated 13-10-2017]:
(i) If a person supplies goods and /or services referred to in paragraph 6(b) of
Schedule II of the said Act i.e. restaurant services and also supplies any exempt
services including services by way of extending deposits, loans or advances in
so far as the consideration is represented by way of interest or discount, the said
person shall not be ineligible for the composition scheme under section 10
subject to the fulfillment of all other conditions specified therein.
(ii) It is further clarified that in computing his aggregate turnover in order to
determine his eligibility for composition scheme, value of supply of any exempt
services including services by way of extending deposits, loans or advances in so
far as the consideration is represented by way of interest or discount, shall not be
taken into account.

(3) Exemption:
Catering services to Educational Institutions – Exempt [Entry 66 of Notification
No. 12/2017 –CT (Rate)]:Services provided to an educational institution providing
pre-school education and education upto higher secondary school or its
equivalent ,by way of, catering, including any mid-day meals scheme sponsored by
the Central Government, State Government or Union territory.[Amended w.e.f. 25-
01-2018]
Que. An air conditioned restaurant made a bill dated 1-10-2017 as follows- Charges for food -
`3,700. Cold drinks – Rs 300. Service charges @ 10% of food charges - `400. Calculate
GST payable if rate of CGST is 2.5% and SGST is 2.5%.
Ans. Computation of the value of taxable supply & GST payable (amount in `):
Charges for food 3,700
Cold drinks [Tax will be charged at the rate applicable to the 300
restaurant]
Service charges [10% of ` (3,700 + 300) 400
Total Value of taxable supply 4,400
CGST payable @ 2.5% 110
SGST payable @ 2.5% 110
Total GST payable 220

Que. Kalyani Hostels (P) Ltd. of the opinion that value of service provided in restaurants and
those provided in outdoor catering should be the same and therefore, if outdoor caterers
do not service liquor and do niot supply in AC environment, they should be eligible for
rate of 12%, as applicable to Non-AC restaurants.
Ans. Restaurant services and Outdoor catering services are altogether different. The Supreme
Court in Tamil Nadu Kalyana Mandapam Assn. v. UOI [2004] 167 ELT 3(SC)
distinguished between outdoor catering service and restaurant service. The court observed
that in case of outdoor catering service:
(i) Choice of food Customer is free to choose the kind, quantum and manner in which
the food is to be served but in the case of restaurant, the customer’s choice of foods
is limited to the menu card.
(ii) Choice of time and place Customer is at liberty to choose the time and place where
the food is to be serviced. Page51

Central Goods & Services Tax Act, 2017