Dear Sir/Madam, I have recently taken a session in an IDT Study circle organized by the Bombay Chartered Accountants Society (BCAS) on the case study based topic INTRICATE ISSUES IN ENTERTAINMENT & HOSPITALITY SECTOR, Pleased to share with you the case study paper and background material prepared for discussion for common benefit. Thanks - Ramandeep Singh Bhatia

1. BCAS IDT STUDY CIRCLE - THURSDAY 17TH FEBRUARY 2022
INTRICATE ISSUES IN ENTERTAINMENT & HOSPITALITY SECTOR
Group Leader: CA. Ramandeep Bhatia; Mentor: CA. Parimal Kulkarni
Case Study No 1
1. Mr. J S Bhuler is planning to construct an amusement park including a
water Park with various other facilities like restaurants, gaming zone,
rides, etc. Mr. Bhuler has some doubts regarding the admissibility of
input tax credit which he wants to get answers from the members of
BCAS.
a) Is input tax credit available on the PVC water slide which will be
installed on the steel structure? Water slides are made up of strong PVC
material.
b) Is input tax credit available on the steel structure on which the slides
will be installed?
c) Input tax will be available or not on goods and services used for area
development and preparation of land on which water slides are erected
and rides will be installed. Is input tax credit available on land lease
charges paid to the state government corporation? (Upfront charges and
lease rental payable at regular intervals).
d) Input tax credit on construction of swimming pool including wave pool
as water slides directly run into pools.
e) Input tax credit on the construction of various rides which includes civil
work, steel structure work and machinery.
f) Can he avail the input tax credit on the construction of building of
restaurant and gaming, as he may rent the premises to the independent
operators?
Case Study No 2
2. Mr. J S Bhuler is also confused about the GST rate of tax for the various
services when he himself is operating all the facilities. He is planning a
two-type ticketing system -

2. BCAS IDT STUDY CIRCLE - THURSDAY 17TH FEBRUARY 2022
INTRICATE ISSUES IN ENTERTAINMENT & HOSPITALITY SECTOR
Group Leader: CA. Ramandeep Bhatia; Mentor: CA. Parimal Kulkarni
a) In first, a combo ticket in form of a package will be provided. A lump sum
amount will be charged from the recipient and the following services will
be included entry to the premises, entry to a water park, unlimited rides,
free costumes at Water Park, meals at the restaurant, and unlimited games at
the gaming zone.
b) In the second option, only charges for entry to the amusement park will be
collected, and the rest all the services will be chargeable separately.
In light of the above-proposed system of ticketing, Mr. Bhuler wants to know
what rate of GST will be charged in both the option for each service i.e. entry
to the premises, entry to the water park, unlimited rides, and free costumes at
Water Park, meals at the restaurant and unlimited games at gaming zone. Does
any option of pricing will affect the input tax credit?
Case Study No 3
3. Bombay sports and welfare society (BSWS) is a trust engaged in
conducting public charitable activities such as healthcare, rural
development, women empowerment, education facility, etc. The
principal objects of the trust as per the trust teed is to organize events
like marathons, blood donation camps, organ donation camps, eye
donation camps, health awareness camps, etc. and utilize the funds
raised from such events for charitable cause like funding to non-
governmental organizations (NGOs), hospitals, trusts and other
charitable organizations. The Trust is registered under section 12AA of
the Income-tax Act, 1961. Donations to the Trust are also exempted
from tax under section 80G of the Income-tax Act, 1961.
a) In the light of the above background BSWS trust has some doubts about the
receipts collected in organizing the event of the marathon, where any
surplus will be utilized to support the cause of providing prosthetic legs.
i) Donation collected from the corporate house for the event.
ii) Donation collected from the participants for the event.

3. BCAS IDT STUDY CIRCLE - THURSDAY 17TH FEBRUARY 2022
INTRICATE ISSUES IN ENTERTAINMENT & HOSPITALITY SECTOR
Group Leader: CA. Ramandeep Bhatia; Mentor: CA. Parimal Kulkarni
Will trust be exempt from paying GST for the above donation being
charitable activity?
b) It has been advised by one of the members of the trust that on donation
collected from the corporate house, trust will not be required to pay any
GST but corporate will itself pay as sponsorship service.
c) Can by reducing the donation per participant for the event, can they avail of
any exemption.
You are required to state your view on the point no “b” & “c” above.
Case Study No 4
4. “Moti Halwai (MH)” is one of the famous restaurant chains in central
India. MH provides its service through e-commerce operators like
zomato, swiggy, etc. Now with the recent changes in GST law, where e-
commerce operators are made liable to pay GST on the restaurant
services u/s 9(5) of CGST ACT, MH is having the following doubts –
a) Is it compulsory for the MH to issue invoices for the service provided
through e-commerce operators.
b) Are they required to include the service provided through e-commerce
operators in the GST returns? If the answer is affirmative then in which
respective field?
c) After one month of operation, it has been noticed that one of the e-
commerce operators is making payment to them after reducing the 5%
of tax of the total value of sales at menu price. Is deduction made by e-
commerce operators is correct considering the GST law?
d) For this issue assume that it is a standalone restaurant/eating place that
sells only re-sale items like ice creams, cold drinks and packed snacks,
etc, then in light of the above amendment who will be required to pay
tax if supplies are made through Eco and the status of the input tax
credit.

4. BCAS IDT STUDY CIRCLE - THURSDAY 17TH FEBRUARY 2022
INTRICATE ISSUES IN ENTERTAINMENT & HOSPITALITY SECTOR
Group Leader: CA. Ramandeep Bhatia; Mentor: CA. Parimal Kulkarni
Case Study No 5
5. Hotel Kingsway is a 5-star hotel situated in Raipur, Chhattisgarh. It has
the facility of 100+ rooms for lodging, restaurant, bar, wedding lawn,
etc. The entity is being audited by the GST department under section 65
of the CGST act and the audit officer has raised the following objection
and you being an expert on the subject is asked to give the advice on the
matter –
a) Hotel in the financial year 2017-18 has incurred some capital expenditure
for the construction of pillar less banquet hall of 20,000 sqft. For the
construction of this building, the hotel has incurred the following
expenditure –
i. Designing, engineering, and civil construction services along with all
the material from the contractor.
ii. Electrical installation which includes wiring, cabling, fans, lights,
Chandelier and electrical contractor charges, etc.
iii. Air conditioning unit for cooling banquet through ducting etc.
iv. Guest lifts and supply lifts along with the installation charges.
v. Decorative items like paintings, curtains, carpets along with the
interior charges.
The officer is of the view that all these expenditures have
collectively resulted in the Banquet hall facility, which is immovable
property, and hence input tax credit is not allowed hence whole
credit needs to be reversed.
b) The hotel has designed the package for renting the banquet hall where apart
from the food charges per plate, the hotel charges banquet rent per hour. For
this hotel prepare two bills, one for the food charges in which GST @5% is

5. BCAS IDT STUDY CIRCLE - THURSDAY 17TH FEBRUARY 2022
INTRICATE ISSUES IN ENTERTAINMENT & HOSPITALITY SECTOR
Group Leader: CA. Ramandeep Bhatia; Mentor: CA. Parimal Kulkarni
charged and one for the banquet charges in which GST @ 18% is charged.
The audit officer has raised the objection that complete service is taxable
18% being composite supply and the separate bill is prepared intentionally
to pass on the input tax credit to the corporates conducting the event.
c) The audit team has objected that sale of cocktail (alcoholic) drinks is treated
as a non-taxable supply; since it is mixed with various juice and flavors it
will be a taxable and not exempt supply. The audit team further objected
that sale of cigarettes in the bar will be taxed at 28% with the applicable
cess and it is currently charged at 5% along with normal food and beverage
item.
d) The hotel has increased its room tariff charges between the month of
December 2020 to January 2021 from Rs.6500/- to Rs.7500/- per day.
However, the hotel continues to collect GST @ 5% on restaurants receipts.
From 01st Februarys the rate of the tariff was again revised to Rs.6500/- per
day due to slow down. The audit team has raised the issue that in between
the period when the tariff was raised, the hotel was required to pay GST @
18% as compared to the actual pay of 5%.
e) In some of the instances the hotel has charged the tariff of Rs.7000/- per
day, however, the extra bed charges of Rs.1500/- are also recovered along
with the normal room tariff. The audit team is of the view that since the
charges of lodging has exceeded Rs.7500/- in total, the GST rate @18%
will be applicable as compared to charged 12%.
Case Study No 6
6. Mr. Hansraj Singh owns a 3-star property in Pune in the name of “Hotel
Blue”. During the second wave of covid-19, due to lack of
hospitalization facility, hotel blue was converted into a hospital/covid
isolation center for the treatment of Covid-19 patients.
a) Mr. Hansraj seeks your views on what value the GST will be payable
and at what rate, in the following scenario and case. Will he be eligible

6. BCAS IDT STUDY CIRCLE - THURSDAY 17TH FEBRUARY 2022
INTRICATE ISSUES IN ENTERTAINMENT & HOSPITALITY SECTOR
Group Leader: CA. Ramandeep Bhatia; Mentor: CA. Parimal Kulkarni
to claim an input tax credit of the current period or utilise the
accumulated credit lying in the credit ledger?
i. Complete property along with the requisite facility and availability was
taken over by the district health department with the order of collector.
The management of the property was with the district health
department. As per the order of the collector a fixed rental of Rs.10 lakh
was payable per month. Electricity bills and other operational charges
will be borne by the health department, to be paid to Mr. Hansraj on an
actual basis. It should be noted that the restaurant facility was not
operational during the period.
ii. If the property is declared as an isolation & care center by the district
health department with the approval of the collector. Lodging charges,
nursing care, and food charges are fixed by the collector and will be
paid by the patient themselves and collected by the hotel. The per
person charges was fixed Rs. 3000/- per day inclusive of all charges.
The nursing staff and doctor on duty were deployed by the health
department for which no charges are collected by the health department
from the patient or from the hotel.
b) The Hotel during the first lockdown was closed for a continuous period
of 3 months which has resulted in wastage of various perishable items
and stores items. Further, the hotel has distributed free meals to the
needy during the lockdown. It is advised by one of the GST officers that
the hotel is required to reverse the input tax credit on the above-
mentioned items and as well items used in the distribution of free meals.
Mr. Hansraj seeks your views on the above matter.
Case Study No 7
7. Lehar hospitality private limited is operating a resort, In connection with
the same, house boats are being acquired and furnished by the applicant.
The house boats are used for overnight cruises and day trips. Meals are
provided as part of package. If alcohol is provided, it will be billed
separately and Sales Tax will be charged. The boarding point may or

7. BCAS IDT STUDY CIRCLE - THURSDAY 17TH FEBRUARY 2022
INTRICATE ISSUES IN ENTERTAINMENT & HOSPITALITY SECTOR
Group Leader: CA. Ramandeep Bhatia; Mentor: CA. Parimal Kulkarni
may not be the point of disembarkation. The boats procured are
furnished with state-of-the-art bedrooms, dining rooms, halls and
kitchens. The rate proposed to be charged by the applicant is an all-
inclusive amount for transportation, accommodation, food and other
incidental services.
The taxation team of the company is of the view that 18% GST will be
applicable on the above service of cruise and ITC will be fully available,
where as one of the board member Mr. chadda who is CA has raised the
concern that where the day cruise starts and end at same point it will be
nothing but restaurant service chargeable @5% GST with no input tax
credit.