GST: Supply of Food & Beverages in Trains is supply of Goods: Delhi AAR
M/s Deepak & Co. (AAR Delhi)
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In the case of supply of food and beverages (cooked/ MRP/ packed), at defined menu and tariff, by the applicant to IRCTC/ passengers on behalf of IRCTC, on board the Rajdhani/ Duronto Express trains, the service charges are covered under Service Code (Tariff) 996335 in Group 99633 of heading 9963 of Annexure/ Scheme of Classification of Services as “catering services in train”.
The same are covered under S. No. 7 (ix) of Notification No. 11/2017 — Central Tax (Rate) dated 28.06.2017 as amended vide Notification No. 46/2017 — Central Tax (Rate) dated 14.11.17 and parallel Notifications of IGST and Delhi GST. A train is a mode of transport and hence cannot be called as a restaurant, eating joint, mess or canteen etc. and hence catering services provided on-board a train are not covered under
No. 7 (i) of the said Notifications as claimed by the applicant. The supply of goods i.e. food, bottled water etc. shall be charged to GST on value of goods (excluding the service charges) at applicable rates as pure supply of goods, as the same have no element of service. The supply of newspaper is separately invoiced and hence it shall be at `Nil” GST under S. No. 120 of Notification No. 2/2017- Central Tax (Rate) dated 28.06.2017and parallel Notifications of IGST and Delhi GST.
In the case of supply of food and beverages (cooked/ MRP/ packed) on board the Mail/ express trains by the applicant directly to the passengers as per the menu/ rates fixed by IRCTC/ Railways does not have any element of service and hence the same shall be considered as pure supply of goods and GST shall be charged on individual items at their respective applicable rates. The benefit of S. No. 7 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017vide Notification No. 46/2017 — Central Tax (Rate) dated 14.11.2017; amendment made in Notification No. 8/2017- Integrated Tax (Rate) dated 28.06.2017vide Notification No. 48/2017 — Central Tax (Rate) dated 14.11.17; amendent made in Notification No. 11/2017—State Tax (Rate) dated 30.06.2017 vide Notification No. 46/2017—State Tax (Rate) dated 28.11.17 are not admissible to the applicant.
Held by AAR:
Supplying food/beverages on board train or in food stalls on the railway platforms is considered as a pure supply of goods. It does not have a service element and would not be treated as a composite supply of services. A train is a mode of transport and it cannot be called a restaurant. Taxability would be as under: Supply of goods, ie food, bottled water etc., shall be charged to GST on individual values of goods (excluding the service charges) at their respective applicable rates. Service charges invoiced separately are classified under the head ‘catering services in train’ and GST is charged at the applicable rate. Supply of newspapers invoiced separately shall be taxed at ‘nil’ rate of GST.
Thus, passengers travelling by trains and consuming food at either railway stations or on trains will have to pay a GST of 5 per cent without input tax credit, the Finance Ministry has said. This ruling basically made food ordered on Indian Railways a bit more expensive.