The Central Board of Indirect Taxes and Customs (CBIC) issued the clarifications regarding applicable GST rates & exemptions on certain services.
The Board has received the representations seeking clarification in respect of applicable GST rates on the various activities namely Services by cloud kitchens/central kitchens, Supply of ice cream by ice cream parlors, Coaching services to students provided by coaching institutions and NGOs under the central sector scheme of “Scholarships for Students with Disabilities”, Satellite launch services provided by NSIL, Overloading charges at the toll plaza, Renting of vehicles by State Transport Undertakings and Local Authorities, Services by way of grant of mineral exploration and mining rights attracted GST, Admission to amusement parks having rides, etc., and Services supplied by contract manufacture to brand owners or others for the manufacture of alcoholic liquor for human consumption.
It has been clarified that service provided by way of cooking and supply of food, by cloud kitchens/central kitchens are covered under “restaurant service‟, as defined in notification No. 11/2017- Central Tax (Rate) and attract 5% GST (without ITC).
As recommended by the Council, the board has 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 the supply of ice cream as goods and not as a service, even if the supply has certain ingredients of service. Accordingly, ice cream sold by a parlor or any similar outlet would attract GST at the rate of 18%.
“Services provided by any institutions/ NGOs under the central scheme of “Scholarships for students with Disabilities” where total expenditure is borne by the Government is covered under entry 72 of notification No. 12/2017-Central Tax (Rate) dated 28th June 2017 and hence exempt from GST,” the government clarified.
This issue has arisen in the wake of a ruling issued by an Authority for Advance Ruling that the entry at Sl. No. 22 of notification No. 12/2017-Central Tax (Rate) exempts services by way of giving on hire vehicles to a State Transport Undertaking or a local authority and not renting of vehicles to them. The ruling referred to certain case laws pertaining to the erstwhile positive list-based service tax regime. The issue was placed before the 45th GST Council Meeting held on 17.09.2021. As recommended by the GST Council, it is clarified that the expression “giving on hire” in Sl. No. 22 of the Notification No. 12/2017-CT (Rate) includes renting of vehicles. Accordingly, services, where the said vehicles are rented or given on hire to State Transport Undertakings or Local Authorities, are eligible for the said exemption irrespective of whether such vehicles are run on routes, timings as decided by the State Transport Undertakings or Local Authorities and under the effective control of State Transport Undertakings or Local Authorities which determines the rules of operation or plying of vehicles.
On the recommendations of the Council, it is clarified that 28% rate [entry 34 (iiia)] applies on admission to a place having a casino or race club [even if it provides certain other activities] or admission to a sporting event like IPL. On the other hand, Entry 34 (iii), having a rate of 18%, covers all other cases of admission to amusement parks, or theme park, etc or any place having joy rides, merry-go-rounds, go-carting, etc, whether indoor or outdoor, so long as no access is provided to a casino or race club. This clarification will also apply to Entries 34(iii) and 34(iiia) as they existed prior to their amendment w.e.f 01.10.2021.
Further, the expression “food and food products” in the said entry excludes alcoholic beverages for human consumption. As such, in common parlance also alcoholic liquor is not considered food. Accordingly, services by way of job work in relation to the manufacture of alcoholic liquor for human consumption are not eligible for the GST rate of 5% prescribed under the said entry. GST Council recommended that such job work would attract GST at the rate of 18%.
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