Taxability of Different Supplies Under GST – CBIC Clarifies

CBIC had vide Circular No. 164/20/2021-GST dated 6.10.2021 released a circular to clarify the position in respect of various matters that were previously subject to debate, such as Taxability of Different Supplies Under GST.

Analysis of the same has been provided for understanding purpose.

• Supply of services by Cloud Kitchen/ Central kitchens

1. Cloud kitchens happen to be ghost kitchens in the sense that they are not made of brick and mortar.
2. Services provided by such restaurants is a restaurant service as the service rendered by them is that of cooking and supplying the food.
3. It is irrelevant even if the food is supplied as a takeaway or through door delivery since as per the definition of restaurant service, the supply of food for consumption on or away from the premises where such food is supplied is also included.
4. Hence, it has been clarified that cooking & supply of food by these kitchens will attract GST at 5% (without ITC).

• Supply of icecream by ice cream parlors

1. Ice cream parlors sell ice creams that are already manufactured i.e. at no stage cooking/ preparing process is involved.
2. Cooking is a significant element of restaurant service. Absence of the same is indicative of the fact that the supply by these parlors doesn’t qualify as restaurant service.
3. This implies that supply of ice cream by these parlors is supply of goods instead of restaurant service.
4. The GST rate in relation to such supply will be 18%.

• Coaching services provided by coaching institutions & NGOs under the central scheme of “Scholarship for students with disabilities”

1. As per entry no. 72 of notification no. 12/2017- Central Tax (Rate), services provided to CG/SG/Union Territory administration under any training programme where the entire cost is borne by the government is exempt under GST.
2. The service of coaching is included within the scope of such services since the entire cost is borne by the government.
3. Hence, these free services that are rendered are exempt from GST as the same are funded by government.

• Satellite launch services provided by NSIL

1. These services are similar to those rendered by ANTRIX Corporation Ltd.
2. Services of ANTRIX Corp. are in the nature of export service when provided to a person resident outside India since place of supply of service of satellite launch falls outside India.
3. When the supplier of service is in India, recipient outside India and place of supply also falls outside India then the supply of service is treated as export of service.
4. Hence, if the services by NSIL are provided to a person resident outside India then the supply will be export of services i.e. zero rated.
5. In case the recipient is in India, the supply will be taxable.

• GST on overloading charges at toll plaza

1. Overloading charges are paid in case of overloaded vehicles for plying on national highways.
2. Such payments are similar to the payments made to gain access to a road/ bridge by way of toll charges.
3. Hence, overloading charges are in the nature of higher toll charges for overloaded vehicles.
4. Such payments are exempt from GST.

• Admission to indoor amusement parks having rides, etc.

1. Any amount paid for admission to places having joy rides, merry-go rounds, go-caring, or places like amusement parks will be subject to GST at 18% irrespective of the same being indoor or outdoor, provided the place doesn’t provide the facility of casino or race cub.
2. Where places happen to have casino or race club (even if other activities are also provided) or admission to sporting events, GST rate should be 28%.

• Services supplied by contract manufacturers to brand owners for manufacture of alcoholic liquor for human consumption

1. In case of job work service of manufacturing alcoholic liquor for human consumption rendered to brand owners,  GST rate will be 18% in place of 5% since in terms of Serial No. 26 (Item 1(i)f) of notification no. 11/ 2017-Central tax (R), 5% gst rate is applicable for job work service related to food & food products.
2. In the common parlance, alcoholic liquor for human consumption doesn’t partake the nature of food and food products. Thus, manufacturing the same as part of job work will be subject to 18% GST.

• Renting of vehicles to State Transport Undertakings and Local Authorities

1. Serial no. 22 of notification no. 12/2017- Central Tax (Rate) exempts services by way of giving on hire to a state transport undertaking or to a local authority, an electrically operate vehicle meant to carry more than 12 passengers.
2. It has been clarified that “giving on hire” includes renting of the concerned vehicle.
3. In an advance ruling it had been held that the exemption would prevail as long as the services are in nature of hire rather than renting of vehicle.
4. To overrule such advance ruling and clarify the matter, it has been made clear that even renting of the aforementioned vehicle will be subject to exemption i.e. exemption will be there whether or not vehicles are under the effective control of the state transport undertaking/ local authority.

• Services by way of grant of mineral exploration and mining rights

1. In various judgements it was concluded that the supply of licensing services for the right to use minerals including its exploration and evaluation will attract 5% GST rate for period 1.7.17 to 31.12.18 in accordance with serial no. 17, item (viii) of notification no.11/2017-central tax rate since over there it has been prescribed that the rate will be the same as applicable to the supply of like goods involving transfer of title.
2. It has been clarified that the aforementioned entry for the above period will not apply since the entry plays a role only when leasing/ renting of goods is involved. However, in granting of mining rights, there is no leasing/ renting of goods involved.
3. It has been further clarified that the GST rate applicable will be 18%.