18% GST on House Boats used for Cruises, Day Trips with Meals as part of Packages: AAR [Read Order]

The Kerala Authority of Advance Ruling (AAR) ruled that 18% GST on house boats used for Cruises, Day Trips with Meals as part of Packages.

The applicant, EVM Motors & Vehicles India Pvt. Ltd. is a major automobile dealer in the State of Kerala. It handles 15 automobile brands with showrooms and workshops spread all round Kerala. As a part of the diversification plan they have started a new venture “Le Leela” in the Hospitality segment.

The new venture is a resort in Muhamma in Alapuzha district. As part of this venture, house boats are being acquired and furnished. These houseboats are to be used for cruises, overnight cruises and for day trips. Meals are provided as part of a package. Alcohol provided, if any, is to be billed separately and KGST will be charged. The boarding point may or may not be the point of disembarkation. The boats procured are to be 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 fare for transportation, accommodation, food services and other incidental services.

The applicant has sought the advance ruling on the issues whether the service rendered by the applicant falls under the Chapter 99, Heading 9964 and Service Code 996415; Whether the rate provided in Notification No.11/ 2017-Central Tax (Rate) dated 28-06-2017 and Notification No.8/ 2017-Integrated Tax (Rate) dated 28-06-2017 under heading 9964 and description in point (vii) having a GST rate of 18% is applicable for the service rendered by this applicant; and whether the applicant is entitled to claim Input Tax Credit.

The coram of Joint Commissioner of Central Tax, Shiva Prasad and Additional Commissioner of State Tax, Senil A.K.Rajan ruled that The applicant is operating a resort at Alapuzha District. 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 Kerala General 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 applicant claims that the service is classifiable under SAC 9964 placing reliance on the explanatory notes to Heading 996415 of the Scheme of Classification of Services under GST. The Scheme of Classification of Services is notified as Annexure to Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017. Chapter 99 — Heading — 9964 pertains to passenger transport services and 996415 pertains to local water transport services of passengers by ferries, cruises and the like. The Explanatory Notes to the Heading 996415 states that the service code includes inland water cruises that include transportation, accommodation, food and other incidental services in an all—inclusive fare. The services rendered by the applicant as detailed above squarely falls under the Heading 996415 in view of the explanatory note and hence the services are appropriately classifiable under SAC 996415.

“The services rendered by the applicant are liable to GST at the rate of 18% [9% -CGST + 9% – SGST] as per entry at SI No. 8 (vii) of Notification No.11/ 2017-Central Tax (Rate) dated 28-06-2017 and Notification No.8/ 2017-Integrated Tax (Rate) dated 28-06-2017,” the AAR ruled.

Lately, the Authority held that the applicant is entitled to claim input tax credit subject to the conditions prescribed in Section 16 of the CGST Act, 2017.

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