CBIC has issued clarifications regarding applicable GST rates &
exemptions on certain goods and services. They are as follows:
Services by cloud kitchens/central kitchens
– The explanatory notes to the classification of service state that “restaurant service” includes services provided by Restaurants, Cafes and similar eating facilities including takeaway services, room services and door delivery of food.
– Therefore, it is clear that takeaway services and door delivery services for
consumption of food are also considered as restaurant service and, accordingly, service by an entity, by way of cooking and supply of food, even if it is exclusively by way of takeaway or door delivery or through or from any restaurant would be covered by restaurant service. This would thus cover services provided by cloud kitchens/central kitchens.
– Accordingly, as recommended by the Council, it is 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].
Supply of ice cream by ice cream parlors
– Ice cream parlors sell already manufactured ice- cream and they do not have a character of a restaurant. Ice-cream parlors do not engage in any form of cooking at any stage, whereas restaurant service involves the aspect of cooking/preparing during the course of providing service. Thus, supply of ice-cream parlor stands on a different footing than restaurant service. Their activity entails supply of ice cream as goods (a manufactured item) and not as a service, even if certain ingredients of service are present.
– Accordingly, as recommended by the Council, it is 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 supply of ice cream as goods and not as a service, even if the supply has certain ingredients of service.
– Accordingly, it is clarified that ice cream sold by a parlor or any similar outlet would attract GST at the rate of 18%.
Coaching services supplied by coaching institutions and NGOs
– GST on free coaching services provided by coaching institutions and NGOs under the central scheme of “Scholarships for students with Disabilities” where entire expenditure is provided by Government to coaching institutions by way of grant in aid.
– Entry 72 of notification No. 12/2017- Central Tax (Rate) dated 28th June 2017, exempts services provided to the Central Government, State Government, Union territory administration under any training programme for which total expenditure is borne by the Central Government, State Government, Union territory administration.
– Accordingly, as recommended by GST Council, it is clarified that services provided by any institutions/ NGOs under central scheme of “Scholarships for students with Disabilities” where total expenditure is borne by Government is covered under entry 72 of notn No. 12/2017- Central Tax (Rate) dated 28th June 2017 and hence exempt from GST.
Satellite launch services provided by NSIL
– Satellite Launch Services supplied by M/s New Space India Limited (NSIL), a wholly-owned Government of India Company under the administrative control of Department of Space (DoS), to international customers as “Export of Service”
– Circular No. 2/1/2017-IGST dated 27.09.2017 clarifies that Place of Supply (PoS) of satellite launch services supplied by ANTRIX Corporation Ltd to customers located outside India is outside India and such supply which meets the requirements of section 2(6) of IGST Act, constitutes export of service and shall be zero rated. If the service recipient is located in India, the satellite launch services would be taxable.
– As recommended by the Council, it is clarified that as the satellite launch services supplied by NSIL are similar to those supplied by ANTRIX Corporation Ltd, the said circular No. 2/1/2017-IGST dated 27.09.2017, is applicable to them.
GST on overloading charges at toll plaza
– Vide notification dated 25th Sep. 2018, issued by Ministry of Road Transport And Highways, overloaded vehicles were allowed to ply on the national highways after payment of fees with multiplying factor of 2/4/6/8/10 times the base rate of toll. Therefore, it essence overloading fees are effectively higher toll charges.
– Entry 23 of notification No. 12/2017-Central Tax (Rate) dated 28th June 2017, exempts Service by way of access to a road or a bridge on payment of toll charges.
– As recommended by the GST Council, it is clarified that overloading charges at toll plazas would get the same treatment as given to toll charges.
Renting of vehicles to State Transport Undertakings and Local Authorities
– Service of renting of vehicles to State Transport Undertakings (STUs) and Local Authorities. Sl. No. 22 of notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 exempts “services by way of giving on hire (a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or (aa) to a local authority, an Electrically Operate vehicle meant to carry more than twelve passengers”
– 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 effective control of State Transport Undertakings or Local Authorities which determines the rules of operation or plying of vehicles .
Services by way of grant of mineral exploration and mining rights
– GST applicable on supply of services by way of granting mineral exploration and mining rights during the period from 1.07.2017 to 31.12.2018. With effect from 1.1.2019, the rate schedule has been specifically amended and it is undisputed since then that such service attracts GST at the rate of 18%.
– As regards classification of service, it was recommended by the Council that service by way of grant of mineral exploration and mining rights most appropriately fall under service code 997337, i.e., “licensing services for the right to use minerals including its exploration and evaluation”.
– It is clarified that even if the rate schedule did not specifically mention the service by way of grant of mining rights, during the period 1.7.2017 to 31.12.2018, it was taxable at 18% in view of principle laid down in the 14th meeting of the Council for residuary GST rate.
Admission to indoor amusement parks having rides etc.
– GST on services provided by Indoor Amusement Parks/Family Entertainment Centers, and scope of the word “amusement park” under entry 34(iii) of Notification No. 11/2017-CTR.
– Entry 34(iii) notification No.11/2017-CTR, prior to 01.10.2021, prescribed 18% GST on the services by way of admission to amusement parks including theme parks, water parks, joy rides, merry-go rounds, go-carting and ballet. On the other hand, Entry No. 34(iiia) prescribed GST rate of 28% on the services by way of admission to entertainment events or access to amusement facilities including casinos, race club, any sporting event such as Indian Premier League and the like.
Services supplied by contract manufacturers to brand owners for manufacture of alcoholic liquor for human consumption
– GST on job work services supplied by contract manufacturers to brand owners for manufacture of alcoholic liquor for human consumption
– Entry in terms of Sl. No. 26 [Item 1(i)f] of notification No. 11/2017- Central Tax (R) dated 28-6-2017 prescribes GST rate of 5% on services by way of job work in relation to food and food products falling under chapters 1 to 22 in the first Schedule to the Customs Tariff Act, 1975.
– As recommended by GST Council, it is clarified that 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 as food. Accordingly, above services 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%.