CASE STUDY PAPER - GST- INTRICATE ISSUES IN ENTERTAINMENT & HOSPITALITY SECTOR,

Let us understand the GST
BCAS IDT Study Circle - Thursday 17th February 2022
Intricate Issues
In
Entertainment
& Hospitality
Sector
CA PARIMAL KULKARNI
(MENTOR)
CA RAMANDEEP SINGH
(LEADER)

CASE STUDY NO 1 : AMUSEMENT PARK
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. He
has some doubts regarding the admissibility of input
tax credit –
A) Is input tax credit available on the PVC water slide.
B) Is input tax credit available on the steel structure on
which the slides.
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?

 INDICATIVE POINTS FOR DISCUSSION
1) PVC Slides can be called as Plant or machinery , being apparatus , equipment, and
machinery ?
2) Steel structure on which the PVC slides will be installed be covered within the
definition of plant and machinery given in the explanation.
3) Can Land development charges will be treated as plant and machinery as slides and
rides will be installed on that only. Is it immovable property,
4) Upfront lease rental charges if capitalize in the books of accounts eligible for input
tax credit . Will there be any change if the accounting treatment is changed?

5) Lease rental payable at regular interval charged to profit and loss will be eligible for
input tax credit considering the explanation.
6) Can swimming pool or wave pool be treated as plant or machinery. For the
purpose if we can divide the cost into civil work and machinery , on which portion ITC
will be allowed ? Can ITC eligibility be seen component wise.
7) Rides which also have civil work , steel structure be treated as plant and machinery
. Will he be eligible for ITC for cement , steel and other building material used for civil
work of the rides.
8) What is the meaning of “own use” as mentioned section 17(5)(d) CGST Act?

 Section 17(5)
(c) works contract services when supplied for construction of an immovable
property (other than plant and machinery) except where it is an input service for
further supply of works contract service;
(d) goods or services or both received by a taxable person for construction of an
immovable property (other than plant or machinery) on his own account including
when such goods or services or both are used in the course or furtherance of
business.
Explanation. — For the purposes of clauses (c) and (d), the expression “construction”
includes re-construction, renovation, additions or alterations or repairs, to the extent
of capitalisation, to the said immovable property;

 Section 17(5)
Explanation. — For the purposes of this Chapter and Chapter VI, the expression
“plant and machinery” means apparatus, equipment, and machinery fixed to earth
by foundation or structural support that are used for making outward supply of
goods or services or both and includes such foundation and structural supports but
excludes —
(i) land, building or any other civil structures;
(ii) telecommunication towers; and
(iii) pipelines laid outside the factory premises.

 Definition of apparatus , equipment and machinery ?
Apparatus which is used for mechanical operations or processes or is employed in a
mechanical or industrial business. In order to qualify as plant the article must have
some degree of durability. Scientific Engineering House Pvt. Ltd. v. Commissioner of
Income Tax, - 1986 (157) ITR 0086 SC
The Hon’ble Apex Court in the case of CIT v. Dr. B. Venkata Rao -
MANU/SC/1284/1999 : (2000) 243 ITR 81(SC) has held that in the case of an
”Operation Theatre” in the hospital, it has been held to be a part of a plant and not a
part of a building.
“Equipment” : the necessary items for a particular purpose.

 Definition of apparatus , equipment and machinery ?
“Machines” and “Machinery” - The word ‘machinery’ when used in ordinary
language prima facie, means some mechanical contrivances, by the combined
movement and interdependent operation of their respective parts generate power, or
evoke, modify or apply direct natural forces with the object in each case of affecting
so definite and specific a result. [Cited from AIR 1922 P.C. 27]. [para 10]
 Triveni Engineering Industries Ltd. v. C.C.E 2000 (120) E.L.T. 273 (S.C.) has held that
lift/elevator would be construed as an integral part of the immovable property.
 Kone Elevators v. State of Tamil Nadu 2014 (304) E.L.T. 161 (S.C.)] has held that in
the case of installation of lift after the goods are assembled and installed with skill
and Labour at the site, it becomes a permanent fixture of the building.

Jayadev Oil Mill v. Additional CCE, Belgaum, a Division Bench of Karnataka High
Court in [STA No. 23 of 1994, dated 20-2-1996]
If the 'building ' is an apparatus or tool used by the Assesse for carrying on the
business or manufacturing activity, then it would be part of the 'plant'. If on the
other hand, if a building or a part of a building has no connection with the business or
manufacturing activity that is being carried on, then obviously such a building or
portion of the building will not be part of the plant.
Inland Revenue Commissioner v. Burly Curie & Co. Ltd., 76 ITR 62,
"In order to decide whether a particular subject is an 'apparatus' it seems obvious
that an enquiry has to be made as to what operation it performs. The functional test
is, therefore, essential at any rate as a preliminary"'.

CASE STUDY NO 2 : AMUSEMENT PARK- TAXABILITY
Mr. J S Bhuler is also confused about the GST rate of tax He is
planning a two-type ticketing system -
A) In first, a combo ticket for 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.
Does any option of pricing will affect the input tax credit?

1) The combo option of ticketing will be composite supply or mixed supply.
2) If it is treated as composite supply what will be the principal supply .
3) If it is treated as mixed supply , will the highest rate of 28% will be paid being
gaming facility included.
4) In case of second option , where all other service is separate charged will it be
composite supply or it will be independent supply.
5) If it is independent supply , what will be rate of tax for gaming service?

SECTION 8. Tax liability on composite and mixed supplies. — The tax liability on a
composite or a mixed supply shall be determined in the following manner, namely :—
(a) a composite supply comprising two or more supplies, one of which is a principal
supply, shall be treated as a supply of such principal supply; and
(30) “composite supply” means a supply made by a taxable person to a recipient
consisting of two or more taxable supplies of goods or services or both, or any
combination thereof, which are naturally bundled and supplied in conjunction with
each other in the ordinary course of business, one of which is a principal supply;
Illustration. - Where goods are packed and transported with insurance, the supply of
goods, packing materials, transport and insurance is a composite supply and supply of
goods is a principal supply;

SECTION 8. Tax liability on composite and mixed supplies. — The tax liability on a
composite or a mixed supply shall be determined in the following manner, namely :—
(b) a mixed supply comprising two or more supplies shall be treated as a supply of
that particular supply which attracts the highest rate of tax.
(74) “mixed supply” means two or more individual supplies of goods or services, or
any combination thereof, made in conjunction with each other by a taxable person for
a single price where such supply does not constitute a composite supply.
Illustration. - A supply of a package consisting of canned foods, sweets, chocolates,
cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a
mixed supply. Each of these items can be supplied separately and is not dependent on
any other. It shall not be a mixed supply if these items are supplied separately;

 NATURALLY BUNDLED (Flyer C.B.E. & C. Flyer No. 4, dated 5-8-2019, ST Edu. Guide)
Depend upon the normal or frequent practices followed in the area of business to
which services relate. Some indicators are listed below -
• Perception of the consumer or the service receiver.
• Majority of service providers in a particular area of business provide similar bundle
of services.
• If the nature of services is such that one of the services is the main service and the
other services combined with such service are in the nature of incidental or
ancillary services which help in better enjoyment of a main service.
• Elements are normally advertised as a package , Single price, not available
separately.
No straight jacket formula can be laid down to determine whether a service
is naturally bundled in the ordinary course of business.

34 Heading
9996
(Recreati
onal,
cultural
and
sporting
services)
(i) Services by way of admission or access to circus, Indian classical dance including folk dance,
theatrical performance, drama 2[or planetarium].
9
(ii) Services by way of admission exhibition of cinematograph films where price of admission ticket
is one hundred rupees or less.
3 [ 6 ]
4 [ (iia) Services by way of admission to exhibition of cinematograph films where price of
admission ticket is above one hundred rupees.
9
1[(iii) Services by way of admission to amusement parks including theme parks, water parks, joy
rides, merry-go rounds, go-carting and ballet.
9
(iiia) Services by way of admission to entertainment events or access to amusement facilities
including 2[***] casinos, race club, any sporting event such as Indian Premier League and the like.
14
(iv) Services provided by a race club by way of totalisator or a license to bookmaker in such club. 14
(v) Gambling. 14
(vi) Recreational, cultural and sporting services other than (i), (ii), 3[(iia),] (iii), 4[(iiia),] (iv) and (v)
above.
9
Notification No. 11/2017-C.T. (Rate), dated 28-6-2017 as amended up-to-date]

Definition of an 'amusement park' as stated in the erstwhile Bombay Entertainment
Act [Section 2(a-l)] which includes the games and rides or both as in the case of the
Company.
Quote
Amusement park means a place wherein various types of amusements including
games or rides or both (but excluding exhibition by cinematograph and video
exhibition) are provided fairly on permanent basis, on payment for admission."
Definition of Game : as defined in the Bombay Entertainment Act which includes
games operated mechanically as well as electronically.

17 Heading 9973
(Leasing or rental
services 1[***]
without operator)
(viia) Leasing or renting of
goods
Same rate of central tax
as applicable on supply
of like goods involving
transfer of title in goods
Notification No. 11/2017-C.T. (Rate), dated 28-6-2017 as amended up-to-date]
7 Heading 9963
(Accommodation
, food and
beverage
services
(ii)
Supply of
'restaurant service'
other than at
specified premises
2.5
Provided that credit of input
tax charged on goods and
services used in supplying the
service has not been taken
[Please refer to Explanation
No. (iv)]

Bandai Namco India (P.) Ltd., In re 2020] 121 taxmann.com 367 (AAAR-
MAHARASHTRA)
Services by way of access to gaming zone, operated by appellant in mall would be
covered by entry (iiia) of S. No. 34 of Notification No. 11/2017-Central Tax (Rate),
dated 28-6-2017 as amended by Notification No. 1/2018 - Central Tax (Rate), dated 25-
1-2018, and would accordingly attract GST at rate of 28 per cent.
Clarification given vide Circular No. 47/21/2018-GST, dated 8-6-2018
The taxability of supply would have to be determined on a case to case basis looking at
the facts and circumstances of each case. Where a supply involves supply of both
goods and services and the value of such goods and services supplied are shown
separately, the goods and services would be liable to tax at the rates as applicable to
such goods and services separately.

CASE STUDY NO 3 : CHARITY MARATHON EVENT
Bombay sports and welfare society (BSWS) is a trust engaged in
conducting public charitable activities, 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). The Trust is registered under
section 12AA of the Income-tax Act, 1961. Donations 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.
Will trust be exempt from paying GST for the above
donation being charitable activity?
B) 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.

1) Can a charitable organization can be said in business. Collecting donation by
organising event be considered as charitable activity.
2) Funds collected will be utilised by them to donate other NGO supporting similar
cause. Can this be considered as charitable activity.
3) Donation with mandatory display of names and brand can be considered as
donation and not taxable.
4) Donation from participants with various obligation like T-shirts, medal etc. can
actually be treated as donation.

(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or
any other similar activity, whether or not it is for a pecuniary benefit;
(b) any activity or transaction in connection with or incidental or ancillary to
sub-clause (a);
(c) any activity or transaction in the nature of sub-clause (a), whether or not there
is volume, frequency, continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital goods and services in
connection with commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or
any other consideration) of the facilities or benefits to its members;
(f) admission, for a consideration, of persons to any premises;
Section 2(17) : Business Includes

NOTIFICATION NO. 12/2017-CENTRAL TAX (RATE), DATED 28-6-2017
Entry no.1
Services by an entity registered under section 12AA of the Income-tax Act, 1961 (43 of
1961) by way of charitable activities.
(r) "charitable activities" means activities relating to—
(i) public health by way of ,—
(B) public awareness of preventive health, family planning or prevention of HIV
infection;
(ii) advancement of religion, spirituality or yoga;
(iii) advancement of educational programmes or skill development relating to,—
(A) abandoned, orphaned or homeless children;
(B) physically or mentally abused and traumatized persons;

Entry no.1
Services by an entity registered under section 12AA of the Income-tax Act, 1961 (43 of
1961) by way of charitable activities.
(r) "charitable activities" means activities relating to—
(C) prisoners; or
(D) persons over the age of 65 years residing in a rural area;
(iv) preservation of environment including watershed, forests and wildlife;

CASE LAW :
Commissioner of Sales Tax v. Sai Publication Fund [2002] 2002 taxmann.com 2342 (SC)
Held that :
Dealer - Trust Created For Spreading Messages Of Saibaba Of Shiridi- Publishes Books,
Pamphlets And Other Literature Containing The Message Of Saibaba Which Are Made
Available To Devotees On Nominal Charge To Meet Cost - Trust Not Dealer - In Order To
Make The Incidental Or Ancillary Activity A Business The Primary Activity Should Be
Business - Element Of Profit Motive - Relevant Only Where The Person Carries On The
Business - Section 2(5-A), 2(11) and 352(1 )(A) of the Bombay Sales Tax Act, 1959 ;
Maharashtra Tax Laws (Levy, Amendment And Repeal) Act, 1989

GST ON CHARITABLE AND RELIGIOUS TRUSTS PRESS RELEASE, DATED 12-9-2017
If income loses its religious nature, it is definitely chargeable to GST. For example, if with
regard to Ganeshutsav or other religious functions, charitable trusts rent out their space
to agencies for advertisement hoardings, income from such advertisement is chargeable
to GST, as this will be considered as income from the advertisement services.
Further, if donation for religious ceremony is received with specific instructions to
advertise the name of a donor, such donation income will be subject to GST. But
if donation for religious ceremony is received without such instructions, it may not be
subject to GST.

Entry 4 - NOTIFICATION NO. 13/2017-CENTRAL TAX (RATE), DATED 28-6-2017
Services provided by way of
sponsorship to any body
corporate or partnership firm
Any person Any body corporate or
partnership firm located in the
taxable territory.

Entry 81 - NOTIFICATION NO. 12/2017-CENTRAL TAX (RATE), DATED 28-6-2017
Services by way of right to admission to—
(a) circus, dance, or theatrical performance including drama or ballet;
(b) award function, concert, pageant, musical performance or any sporting event other than a
recognised sporting event;
(c) recognised sporting event;
(d) planetarium,
where the consideration for right to admission to the events or places as referred to in
item (a), (b), (c) or (d) above is not more than Rs. 500 per person.

CASE STUDY NO 4 : RESTAURANT -E-COM OPT.
4) “Moti Halwai (MH)” is one of the famous
restaurant chains. MH provides its service through e-
commerce operators like zomato, swiggy, etc 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?

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.

Section 9(5) :
The Government may, on the recommendations of the Council, by notification, specify
categories of services the tax on intra-State supplies of which shall be paid by the
electronic commerce operator if such services are supplied through it, and all the
provisions of this Act shall apply to such electronic commerce operator as if he is the
supplier liable for paying the tax in relation to the supply of such services:
Provided that where an electronic commerce operator does not have a physical
presence in the taxable territory, any person representing such electronic commerce
operator for any purpose in the taxable territory shall be liable to pay tax:
Section 2(105) : “supplier” in relation to any goods or services or both, shall mean
the person supplying the said goods or services or both and shall include an agent
acting as such on behalf of such supplier in relation to the goods or services or both
supplied;

SECTION 31. Tax invoice. — (1) A
registered person supplying taxable
goods shall, before or at the time of,
—
Provided that the Government may,
on the recommendations of the
Council, by notification, specify the
categories of goods or supplies in
respect of which a tax invoice shall
be issued, within such time and in
such manner as may be prescribed.
SECTION 39. Furnishing of
returns. — [(1) Every
registered person,………………….,
for every calendar month or
part thereof, furnish, a return,
electronically, of inward and
outward supplies of goods or
services or both, input tax
credit availed, tax payable, tax
paid and such other particulars,
in such form and manner, and
within such time, as may be
prescribed

CIRCULAR NO. 167/23/2021-GST [CBIC-190354/207/2021-TRU SECTION-CBEC], DATED
17-12-2021
10. Who will issue invoice in respect of restaurant service supplied through ECO -
whether by the restaurant or by the ECO?
The invoice in respect of restaurant service supplied through ECO under section 9(5) will
be issued by ECO.

17-12-2021
11. Clarification may be issued as regard reporting of restaurant services, value and tax
liability etc in the GST return.
Registered persons supplying restaurant services through ECOs under section 9(5) will
report such supplies of restaurant services made through ECOs in Table of GSTR-1 and
Table 3.1 (c) of GSTR-3B, for the time being.

17-12-2021
1. Would ECOs have to still collect TCS in compliance with section 52 of the CGST Act,
2017?
As 'restaurant service' has been notified under section 9(5) of the CGST Act, 2017, the
ECO shall be liable to pay GST on restaurant services provided, with effect from the 1st
January, 2022, through ECO. Accordingly, the ECOs will no longer be required to collect
TCS and file GSTR 8 in respect of restaurant services on which it pays tax in terms of
section 9(5).
On other goods or services supplied through ECO, which are not notified u/s 9(5), ECOs
will continue to pay TCS in terms of section 52 of CGST Act, 2017 in the same manner at
present.

CIRCULAR NO. 164/20/2021-GST, DATED 6-10-2021
4.2 Ice cream parlors sell already manufactured ice-cream and they do not have a character
of a restaurant. Ice-cream parlors do not engage in any form of cooking at any stage,
whereas, restaurant service involves the aspect of cooking/preparing during the course of
providing service. Thus, supply of ice-cream parlor stands on a different footing than
restaurant service. Their activity entails supply of ice cream as goods (a manufactured item)
and not as a service, even if certain ingredients of service are present.
4.3 Accordingly, as recommended by the Council, it is clarified that where ice cream parlors
sell already manufactured ice-cream and do not cook/prepare ice-cream for consumption
like a restaurant, it is supply of ice cream as goods and not as a service, even if the supply
has certain ingredients of service. Accordingly, it is clarified that ice cream sold by a parlor or
any similar outlet would attract GST at the rate of 18%.

CASE STUDY NO 5 : HOTEL KINGSWAY .
5. Hotel Kingsway is a 5-star hotel, The entity is being audited by the GST department you
are asked to give the advice on the matter –
a) Hotel has incurred some capital expenditure for the construction of pillar less banquet
hall 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.

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 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%.

 Points for Discussion:
A) ITC available for designing, engineering, and civil construction services along with all
the material from the contractor.
i) All material permanently fixed in building – Glass , Tiles, Sanitary etc.
B) ITC available for electrical installation which includes
i) Wiring, cabling – Is it a part of Immovable property or Building, Is it movable.
ii) Fans, lights, Chandelier - Is it a part of Immovable property or Building, Is it movable
iii) Electrical contractor charges, etc. – Assume Lump sump or Work wise Bill

iii) Air conditioning unit for cooling banquet through ducting etc.
iv) Guest lifts and supply lifts along with the installation charges.
- Movable or immovable to be checked as a whole or individual component like chillers ,
AC pumping
- Even if it result in immovable property – is ITC allowed being used directly for outward
supply .

V) Decorative items like paintings, curtains, carpets along with the interior charges.
- What is it is fixed by nut bolt to any part of the building – moveable or immovable
- Consultation charges of interior
Banquet as whole to be checked as immoveable property –whole ITC not allowed.
B) Restaurant food and banquet rental is separately billed can be composite supply –
being naturally bundle . If yes –dominant supply – Banquet or restaurant . Can it be
taxed as mixed supply in any case. Is it a independent supply ?

C) Sale of cocktail (alcoholic) drinks will be treated as taxable supply being part of
restaurant supply or will still remain alcohol not taxable?
If it is treated as alcohol supply – does it have any impact on reversal of ITC.
Sale of cigarettes in the bar will be treated as taxable supply being part of
restaurant supply or separate goods?
If separate goods – than position of ITC .

D) Increased its room tariff charges between the month of December 2020 to
January 2021 from Rs.6500/- to Rs.7500/- per day
- Is higher rate of GST to restaurant will be applicable from same day,
immediately or from next month or from next financial year.
- How will the they take input tax credit , if higher rate is applicable on input ,
input services and capital goods.
- The subsequent reduction is price , how will it impact the rate of GST and ITC .

Points for Discussion:
E) Extra bed charges separate service than accommodation services and it will be
taxable separately -
Will it be composite supply – Yes – Rate of Tax 12% or 18%
Separate service – Taxable – Rate of tax 18%

 Section 17(5)
(c) works contract services when supplied for construction of an immovable property
(other than plant and machinery) except where it is an input service for further supply of
works contract service;
(d) goods or services or both received by a taxable person for construction of an
immovable property (other than plant or machinery) on his own account including when
such goods or services or both are used in the course or furtherance of business.
Explanation. — For the purposes of clauses (c) and (d), the expression “construction”
includes re-construction, renovation, additions or alterations or repairs, to the extent of
capitalisation, to the said immovable property;

Explanation. — For the purposes of this Chapter and Chapter VI, the expression “plant
and machinery” means apparatus, equipment, and machinery fixed to earth by
foundation or structural support that are used for making outward supply of goods or
services or both and includes such foundation and structural supports but excludes —
(i) land, building or any other civil structures;
(ii) telecommunication towers; and
(iii) pipelines laid outside the factory premises.

Synergy Global Steel (P.) Ltd., In re [2021] 124 taxmann.com 428 (AAR - HARYANA)
Cable and other material such as PCC Poles, structural steel, cable end kit, HDPE pipes,
GO switch etc. have been installed in building for transmission of power from outside
sources up to premises and service of electrical installations and laying of Cable have
been used in building for transmission of electricity in premises and, thus, these goods
and services are for permanent beneficial enjoyment of building and therefore, Input
tax credit cannot allowed as per section 17(5)(d)

C.B.E. & C. Flyer No. 4, dated 5-8-2019 – Composite Supply V/s Mixed Supply
Illustrated :
As is evident a bouquet of services is being provided, many of them chargeable to different
effective rates of tax. None of the individual constituents are able to provide the essential
character of the service. However, if the service is described as convention service it is able to
capture the entire essence of the package. Thus, the service may be judged as convention service
and chargeable to full rate. However, it will be fully justifiable for the hotel to charge individually
for the services as long as there is no attempt to offload the value of one service on to another
service that is chargeable at a concessional rate.

In Triveni Engg. & Industries ltd. vs. CCE [(2000) 7 SCC 29; (2000)120 ELT 273]-2000(8)TMI
That installation or erection of turbo alternator on the platform constructed on the land would
be immovable property, as such it cannot be an excisable goods falling within the meaning of
Heading 85.02
Municipal Corporation of Greater Bombay &ors. V. Indian Oil Corporation Ltd. [199 Suppl. SCC
18] ,. It was pointed out that the test was one of permanency; if the chattel was movable to
another place of use in the same position or liable to be dismantled and re-erected at the later
place, if the answer to the former is in the positive it must be a movable property but if the
answer to the later part is in the positive then it would be treated as permanently attached to
the earth.

Mfar Hotels & Resorts (P.) Ltd., In re [2020] 120 taxmann.com 442 (AAR - TAMILNADU)
GST : Supply of tobacco products by restaurant is not a composite supply but mixed supply as it
involves two individual supplies, i.e., of goods (tobacco products) and supply of services by serving
by restaurant, and applicable rate of tax for cigarettes classifiable as CTH 2402 is 14 per cent CGST
and 14 per cent SGST as per Sl. No. 14 of Schedule IV of Notification No. 1/2017- Central Tax (Rate),
dated 28-6-2017
GST : As per section 9(1), supply of alcoholic liquor for human consumption, is a non-taxable supply,
and, hence, said supply by restaurant will not be taxable
(xxxii)"Restaurant service" means supply, by way of or as part of any service, of goods,
being food or any other article for human consumption or any drink, provided by a
restaurant, eating joint including mess, canteen, whether for consumption on or away
from the premises where such food or any other article for human consumption or drink
is supplied.

997212 Rental or leasing services involving own or leased non-residential property
This service code includes :
- rental or leasing services concerning industrial, commercial or other non-
residential buildings or property by owners or leaseholders, such as factories, office
buildings, warehouses, theatres, convention centers, exhibition halls and multiple-use
buildings that are primarily non-residential; agricultural, forestry and similar properties.
- rental or leasing of caravan sites, lock-up garages or other places for parking vehicles,
by the month or year
- As per Notification No. 11/2017-Central Tax (Rate) notification (amended time to
time), the GST rate for all Real Estate Services under 9972 is 18%.

(xxxvi) ’Specified premises’ means premises providing ‘hotel accommodation’ services
having declared tariff of any unit of accommodation above seven thousand five
hundred rupees per unit per day or equivalent.]
7 Heading 9963
(Accommodation
, food and
beverage
services
(ii)
Supply of
'restaurant service'
other than at
specified premises
2.5
Provided that credit of input
tax charged on goods and
services used in supplying the
service has not been taken
[Please refer to Explanation
No. (iv)]

C.B.E. & C. Circular No. 27/01/2018-GST,
dated 4-1-2018 - F.No. 354/107/2017-TRU
2.What will be GST rate if cost goes up (more
than declared tariff) owing to additional bed.
2.GST rate would be determined according to
declared tariff for the room, and GST at the
rate so determined would be levied on the
entire amount charged from the customer. For
example, if the declared tariff is Rs. 7000 per
unit per day but the amount charged from the
customer on account of extra bed is Rs. 8000,
GST shall be charged at 18% on Rs. 8000.
Not. 11/2017
Heading 9963
(Accommodation, food and beverage
services)
[(i) Supply of ‘hotel accommodation’
having value of supply of a unit of
accommodation above one thousand
rupees but less than or equal to seven
thousand five hundred rupees per unit
per day or equivalent.

CASE STUDY NO 6 : HOTEL – HOSPITAL/ ISOLATION CENTER
6) 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) On what value the GST will be payable and at what rate, he
be eligible to claim an input tax credit of the current period or
utilize the accumulated credit lying in the credit ledger?
I) Complete property along with the requisite facility and availability was taken, 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. 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.
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..

1) In first scenario will it be renting of immovable property or accommodation
service. On what value the tax will be payable? Is service taxable or exempt. If it
is taxable than at what rate of tax, Input tax credit will be eligible on the same.
2) In the second scenario , the services rendered by hotel is accommodation
service or health care service or any other. What rate of tax will be applicable or
it will be exempt supply. If it is taxable than can hotel utilize the ITC for payment
of tax.
3) Wastage of perishable item and stores will be covered by 17(5)(h), triggering
reversal of ITC.

4) The hotel is saying in the normal course also there are many daily items which
they cannot use or waste because of there short shelf life. Most of Items were of
the same nature , Will then be also reversal is required.
5) Providing free meals is a supply ? Can it be said that it is offered as by way of gift
or as free sample so that it requires reversal of ITC used on those meals. Can It be
said that it is part of business CSR activity taken voluntary and in the course of
business ?

 Section 15 :
2) The value of supply shall include —
(b) any amount that the supplier is liable
to pay in relation to such supply but which
has been incurred by the recipient of the
supply and not included in the price
actually paid or payable for the goods or
services or both;
(c) incidental expenses, including
commission and packing, charged by the
supplier to the recipient of a supply and
any amount charged for anything done by
the supplier in respect of the supply of
goods or services or both at the time of, or
before delivery of goods or supply of
services;
 RULE 33. Value of supply of services in case of pure
agent. — Notwithstanding anything contained in the
provisions of this Chapter, the expenditure or costs incurred
by a supplier as a pure agent of the recipient of supply shall
be excluded from the value of supply, if all the following
conditions are satisfied, namely, -
(i) the supplier acts as a pure agent of the recipient of the
supply, when he makes the payment to the third party on
authorisation by such recipient;
(ii) the payment made by the pure agent on behalf of the
recipient of supply has been separately indicated in the
invoice issued by the pure agent to the recipient of
service; and
(iii) the supplies procured by the pure agent from the
third party as a pure agent of the recipient of supply are in
addition to the services he supplies on his own account.

 NOTIFICATION NO. 12/2017-CENTRAL TAX (RATE), DATED 28-6-2017:
Entry -3
Pure services (excluding works contract service or other composite supplies
involving supply of any goods) provided to the Central Government, State
Government or Union territory or local authority or a Governmental authority 1[or a
Government Entity by way of any activity in relation to any function entrusted to a
Panchayat under article 243G of the Constitution or in relation to any function
entrusted to a Municipality under article 243W of the Constitution.
Entry 23 - Article 243G of the Constitution – 11th Schedule
Health and sanitation, including hospitals, primary health center's and dispensaries.

 NOTIFICATION NO. 12/2017-CENTRAL TAX (RATE), DATED 28-6-2017:
Entry 74
a) health care services by a clinical establishment, an authorised medical
practitioner or para-medics;
"health care services" means any service by way of diagnosis or treatment or care
for illness, injury, deformity, abnormality or pregnancy in any recognised system of
medicines in India and includes services by way of transportation of the patient to
and from a clinical establishment, but does not include hair transplant or cosmetic
or plastic surgery, except when undertaken to restore or to reconstruct anatomy or
functions of body affected due to congenital defects, developmental abnormalities,
injury or trauma;

 Section 17(5)
(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free
samples;
SCHEDULE I [See section 7]
ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION
1. Permanent transfer or disposal of business assets where input tax credit has been
availed on such assets.
ESSEL PROPACK LTD. Versus COM.OF CGST, BHIWANDI 2018 (362) E.L.T. 833 (Tri. - Mumbai)
CSR not charity as same having direct bearing on manufacturing activity of company

CASE STUDY NO 7 : HOUSE BOAT CRUISE
7. Lehar hospitality private limited is operating a resort, 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 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.

Points for Discussion :
1) Can it be said it is entertainment and amusement facility and food /drinks being
part of composite supply since it starts and stop at same place chargeable @ 28%
of tax.
2) Are Services provided by the resort is restaurant services just like moving
restaurant.
3) Is services provided by the resort, classifiable as passenger transport service.

Relevant provision or Law :
Amusement facility means development for amusement pastimes, and may
incorporate eating and drinking facilities as an accessory use.
(Law insider - Dictionary meaning)
(xxxii)"Restaurant service" means supply, by way of or as part of any service, of
goods, being food or any other article for human consumption or any drink,
provided by a restaurant, eating joint including mess, canteen, whether for
consumption on or away from the premises where such food or any other article
for human consumption or drink is supplied.

Relevant provision or Law :
Passenger transport services
Local transport and sightseeing transportation
services of passengers
996411 Local land transport services of passengers by
railways, metro, monorail, bus, tramway, autos, three
wheelers, scooters and other motor vehicles
996412 Taxi services including radio taxi and other similar
services
996413 Non-scheduled local bus and coach charter services
996414 Other land transportation services of passengers
996415 Local water transport services of passengers by
ferries, cruises and the like
996416 Sightseeing transportation services by rail, land,
water and air
996419 Other local transportation services of passengers
nowhere else classified
NOTIFICATION NO. 11/2017-CENTRAL TAX
(RATE), DATED 28-6-2017
Entry 8
Heading 9964 (Passenger transport
services)
(Vii)Passenger transport services other than
(i), (ii), (iii), (iv), 2[(iva),] (v) and (vi) above.
- 18%

CA RAMANDEEP SINGH BHATIA (LEADER) CA PARIMAL KULKARNI (MENTOR)
Tell me and I forget.
Teach me and I remember.
Involve me and I learn.
Benjamin Franklin

CASE STUDY PAPER - GST- INTRICATE ISSUES IN ENTERTAINMENT & HOSPITALITY SECTOR,

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CASE STUDY PAPER - GST- INTRICATE ISSUES IN ENTERTAINMENT & HOSPITALITY SECTOR,