Based on the recommendations of the 50th GST Council Meeting held on 11th July 2023, the finance ministry has issued the clarification on the issue of whether supply of food or beverages in cinema hall is taxable as restaurant service.
The Circular no. 201/13/2023-GST was issued on 1st August 2023, addressed to The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioner of Central Tax (All) / The Principal Director Generals/ Director Generals (All).
As per Explanation at Para 4 (xxxii) to notification No. 11/2017-CTR dated 28.06.2017, “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.”
Eating joint is a wide term which includes refreshment or eating stalls/ kiosks/ counters or restaurant at a cinema also.
The cinema operator may run these refreshment or eating stalls/ kiosks/ counters or restaurants themselves or they may give it on contract to a third party. The customer may like to avail the services supplied by these refreshment/snack counters or choose not to avail these services.
Further, the cinema operator can also install vending machines, or supply any other recreational service such as through coin-operated machines etc. which a customer may or may not avail.
Clarification:
It is hereby clarified that supply of food or beverages in a cinema hall is taxable as ‘restaurant service’ as long as:
a) the food or beverages are supplied by way of or as part of a service, and
b) supplied independent of the cinema exhibition service.
Additionally, it was clarified that when the sale of cinema tickets and the supply of food and beverages are combined as a bundled supply, and this bundled supply meets the criteria of a composite supply, the entire supply will be subject to GST at the rate applicable to the principal supply, which is the service of cinema exhibition.
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