The Advance Ruling Authority ( AAR ), West Bengal has held that if the food is supplied by way of or as part of the services associated with organizing social events at the club premises, together with renting of such premises, it would attract 12% GST.
The applicant, a non-profit company is engaged in providing its members privileges and amenities of a club such as swimming facility, gymnasium, indoor games, restaurant service etc. they approached the AAR for a clarification regarding the tax liability on the services provided by them including the supply of food, services like valet parking, music, decoration and other such services associated with organizing social gatherings etc.
The AAR noticed that the Applicant’s services can broadly be classified into two categories: supply of food, by way of or as part of the services provided at its restaurant or at the social events organized in the club premises, and other services to the members and the guests that are not bundled with the supply of food and are charged separately.
It was observed that the supply of food, by way of or as part of any service or in any other manner whatsoever, is a composite supply, which shall be treated as service in terms of Para 6(b) of Schedule II of the GST Act. It is classifiable under SAC 9963 and taxable under different clauses of Sl No. 7 of the Rate Notification.
The authority held that “When the Applicant makes such a supply of food from its restaurant, along with eating facility and ambience and other amenities, whether or not the food is consumed at the restaurant or taken away, it is taxable under Sl No. 7(i) or 7(iii) of the Rate Notification, depending upon the criteria mentioned therein. If the Applicant provides no lodging service, such supplies of food will be taxable under Sl No. 7(i) of the Rate Notification, provided no credit of the input tax is taken.”
“If food is supplied by way of or as part of the services associated with organizing social events at the club premises, together with renting of such premises, it will be taxable under Sl No. 7(vii) of the Rate Notification. Supply of any other goods in such an event will also be taxable under Sl No. 7(vii) of the Rate Notification. 3.4 All other services offered by the Applicant, being services of a membership organization, are classifiable under SAC 9995 and taxable under Sl No. 33 of the Rate Notification. They include swimming and other facilities and services that are not bundled with the supply of food and charged separately, whether or not provided at the restaurant or at any other place,” the authority said.
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