Application for clarifying GST on utility charges collected by company from its Restaurant partners disposed as withdrawn by applicant: AAR

The Karnataka Authority for Advance Ruling disposed of the application for clarifying Goods and Service Tax on utility charges collected by the company from its restaurant partners due to withdrawal by the applicant.

The applicant, Loyal Hospitality Pvt Ltd, operates the 'Kitchens @' brand to provide kitchen infrastructure and technology services to restaurant/food brands. They operate centralized remote kitchens wherein the Restaurant Partners are provided all necessary infrastructure like kitchen equipment, tools, utilities, and technological support, enabling them to fully prepare and deliver their food products to customers. The applicant charges an agreed service fee for these services.

The Restaurant Partners are obliged to pay gas, electricity, water charges, and other operational expenses (Utility Charges) that the applicant may incur specific to the respective Restaurant Partners. Electricity and water connections are in the name of the landlord as the kitchens are built in building space leased from the landlord. Gas and other utilities are directly sourced by the applicant from third-party vendors.

The applicant sought an advance ruling in respect of the question "Whether utility charges collected by the company from its Restaurant Partners attract GST under CGST/KGST Act?"

The applicants were given an opportunity for a personal hearing, and Sri. Ashish Koppa, C.A. & Authorized Representatives, appeared and reiterated their understanding of the issues on which an advance ruling was sought. However, the applicant requested this authority to permit them to withdraw their application.

Therefore, two-member benche of the Authority of Advance Ruling, Dr. M.P. Ravi Prasad, Additional Commissioner of Commercial Taxes, Member (State), and Kiran Reddy T, Additional Commissioner of Customs & Indirect Taxes, Member (Central), disposed of the application for clarifying Goods and Service Tax on utility charges collected by the company from its restaurant partners due to withdrawal by the applicant.

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