The Delhi Authority for Advanced Ruling ( AAR ) recently ruled that the food and beverages at defined menu and tariff on board trains shall be charged to GST on the value of goods (excluding the service charges) at applicable rates as the pure supply of goods, as the same has no elements of service.
The applicant, M/s Deepak & Co. has entered into agreement with IRCTC/Indian Railways for supply of food and beverages (packed/MRP/cooked) to passengers of mail and express trains and also engaged in supplying of food on board the trains vide the menu approved by the Indian Railway/IRCTC and also in supply of food items to passengers through food plaza/food stall on the railway stations.
The authority commented that a train is a mode of transport and hence cannot be called as a restaurant, eating joint, mess or canteen etc. and hence catering service provided onboard a train is not covered under section 7(i) of the CGST Act 2017.
In the case of supply of food and beverages directly to the passenger, the activity in the opinion of the authority does not have any element of service and hence GST shall be charged on individual items as per their respective applicable rates.
The authority has also observed that mere heating/ cooling of beverages or similar other services are incidental and minimal required to supply of goods and such supply cannot be called composite supply and hence tax benefits are not admissible to the applicant.
The Authority, however, insisted on not making any ruling regarding the supply of food in food plazas on railway platforms as the relevant documents were not submitted.
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