18% GST on food-drinks within or away from hotel: Maha authority
In a significant order, the Maharashtra Authority for Advance Ruling (MAAR) rejected a plea by a five-star hotel contending that food and beverages served in a restaurant away from the hotel premises should attract 5 per cent GST instead of 18 per cent.
A bench consisting of P. Vinitha Sekhar, Additional Commissioner of Central Tax and A. A. Chahure, Joint Commissioner of State Tax have ruled with reasons that the applicant J. W. Marriott Hotel here would have to pay 18 per cent GST.
M/s. Chalet Hotel Ltd, which runs the J. W. Marriott Hotel near Chhatrapati Shivaji Maharaj International Airport, said it was planning to launch a business of providing food-beverages for consumption at 'The Cheaters' which is located in The Orb Mall nearby.
Both the hotel and the retail arcade (mall) are owned by M/s. Chalet Hotels Ltd., and are interconnected by a private passageway, and there is no need to exit the premises for access since both are provided with a common entry gate.
The company said that there are no residential or lodging facilities in the mall and all such services (residential or lodging) are provided only in the J. W. Marriot Hotel, where the declared tariff is Rs 7,500 and above per room daily.
The company questioned the applicability of the amended Section 7 of CGST Act, 2017, since their restaurant (The Cheaters) is located in the mall and not in the hotel premises.
It submitted that food-beverages provided for consumption in the restaurant premises are a 'supply' which would attract 18 percent GST if the restaurant is located on the hotel premises.
The company contended that since the restaurant will be located in the mall which does not offer residence or lodging services and not in the hotel premises, a GST of only 5 per cent would be applicable.
Challenging this, the CGST representatives said that 'The Cheaters' is owned and operated in The Orb mall by M/s. Chalet Hotels Ltd., which also owns and operates the J. W. Marriott Hotel on the same plot, there is a common entry gate and both premises (arcade and hotel) are connected by a private passage and the restaurant's services are primarily intended for the guests of the hotel.
After listening to both sides, the MAAR bench ordered last month that the mall restaurant is located in the same premises as the J. W. Marriot Hotel, owned by the same company, and accordingly, the 18 percent GST would be applicable to it as per the law.