The Delhi Appellate Authority of Advance Ruling (AAAR) has ruled that the supply of food and drinks, whether in trains or on platforms, will attract 5% Goods and Services Tax (GST) without Input Tax Credit (ITC).
The applicant has entered into an agreement with Indian Railways/IRCTC for the supply of food and beverages to the passengers on Rajdhani and mail/express trains. The appellant is engaged in supplying food on board the trains to the passengers travelling on these trains, and the Indian Railways/IRCTC approves the menu.
Likewise, the applicant is also engaged in supplying food items to passengers or the public through food plazas or food stalls at the railway station. Accordingly, the applicant sought an advance ruling on the applicability of the GST rate on the applicant’s activity of supplying food and beverages and newspapers.
The AAR ruled that the supply of food and beverages with a defined menu and tariff 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 an eating joint, restaurant, canteen, mess, etc. Thus, catering services provided on board a train are not covered under S. No. 7 (i) of the Notifications mentioned by the applicant.
The supply of food, bottled water, etc., shall be charged GST on the value of goods at applicable rates as a pure supply of goods has no service element.
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 fixed by IRCTC, there is no service element. Hence, it shall be considered a pure supply of goods, and the applicant shall charge GST on individual items at their respective applicable rates.
Also, 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 application was limited to the applicable tax rate on the appellant’s activity of supplying food and beverages.
The AAAR ruled that the supply of food or drinks by the Indian Railways or IRCTC or their licensees attracts 5% GST (without ITC). This rate applies both on a supply made on trains or at platforms.
For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@clear.in
DVSR Anjaneyulu known as AJ, is a Chartered Accountant by profession. Loves to listening to music & spending time with family and friends.
