Supply Of Food And Drinks In Trains Or At Platforms Attracts 5% GST: AAAR

The two-member bench of Mallika Arya and Ankur Garg ruled that the supply of newspapers to pessangers is exempt from GST.

The appellant has entered into an agreement with IRCTC/Indian Railways for the supply of food and beverages (packed/MRP/cooked) to the passengers on Rajdhani Trains and also mail/express trains. The appellant is engaged in supplying food on board the trains to the passengers travelling on these trains, and the menu is approved by the Indian Railways/IRCTC. Likewise, the appellant is also engaged in supplying food items to passengers or the public through food plazas or food stalls at the railway station.

The appellant sought an advance ruling on the issue in respect of the applicability of the GST rate on the activity of the appellant of supplying food and beverages and newspapers.

The AAR ruled that in the case of the supply of food and beverages (cooked/MRP/packed) at a defined menu and tariff by the applicant to IRCTC/passengers on behalf of IRCTC, on board the Rajdhani and Duronto Express trains are classified as "catering services in train". A train is a mode of transport and hence cannot be called a restaurant, eating joint, mess, canteen etc. Hence, catering services provided on-board a train are not covered under S. No. 7 (i) of the Notifications as claimed by the applicant. The supply of goods, i.e., food, bottled water, etc., shall be charged GST on the value of goods (excluding the service charges) at applicable rates as a pure supply of goods has no element of service. Because the supply of newspaper is separately invoiced, the GST rate will be "Nil."

The AAR further held that in the case of the supply of food and beverages on board the mail and express trains directly to the passengers as per the menu/rates fixed by IRCTC/Railways, there is no element of service. Hence, it shall be considered as a pure supply of goods and GST shall be charged on individual items at their respective applicable rates.

The AAR ruled that the supply of food and beverages by the applicant to the passengers at the rates fixed by the Indian Railways/IRCTC at food stalls at railway platforms does not have any element of service. Hence, it shall be considered as a pure supply of goods and GST shall be charged on individual items at their respective applicable rates. The mere heating or cooling of beverages or similar other services is incidental and minimally required to supply goods, and the supply cannot be called composite supply.

The appeal was on the limited point of whether the activity of the appellant relating to the supply of newspapers is taxable under the provisions of the CGST Act, 2017 and the applicable rate of tax on the activity of the appellant of supplying food and beverages.

The AAAR noted that with the approval of the GST Implementation Committee, the GST rate on the supply of food and/or drinks by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd. or their licensees, whether in trains or at platforms (static units), will be 5% without ITC.

Applicant's Name: Deepak & Co.

Citation: Advance Ruling No./02/DAAAR/2022-23/2005-2010/21.06.2022

Dated: 23.05.2022

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