Circular No 201/13/2023-GST Clarification of RCM on Director Services and GST on food or beveragesin cinema hall
F. No. 190354/133/2023-TRU
Government of IndiaMinistry of Finance Department of Revenue
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North Block, New Delhi, Dated the 1stAugust, 2023
To, The Principal Chief Commissioners/ Chief Commissioners/ PrincipalCommissioners/ Commissioner of Central Tax (All) / The Principal Director Generals/ Director Generals (All) Madam/Sir
Subject: Clarifications regarding applicability of GST on certain services –reg.
Representations have been received seeking clarifications on the following issues
1.Whether services suppliedby director of a company in his personal capacity such as renting of immovable property to the companyor body corporate are subject to Reverse Charge mechanism;2.Whether supply of food or beverages in cinema hall is taxable as restaurant service
The above issues have been examined by GST Council in the 50th meeting held on 11thJuly, 2023. The issue -wise clarificationsas recommended by the Councilare given below:
Whether services supplied by director of a company in his personal capacity such as renting of immovable property to the company or body corporate are subject to Reverse Charge mechanism:
2.Referencehas been received requestingfor clarification whether services supplied bya director of a company or body corporatein personal or private capacity, such as renting of immovable property to the company, aretaxable under Reverse Charge Mechanism(RCM) or not.
2.1Entry No. 6 of notification No. 13/2017 CTR dated 28.06.2017 provides that tax on services supplied by director of a company or a body corporate to the said company or the body corporate shall be paid by the company or the body corporateunderReverse Charge Mechanism.
2.2It is hereby clarified that services supplied by a director of a company or body corporate to the companyor body corporatein his private or personal capacity such as services supplied by way of renting of immovable property to the company or body corporate are not taxable under RCM. Only those services supplied by director of company or body corporate, which are supplied by him as or in the capacity of director of that company or body corporate shall be taxable under RCM in the hands of the company or body corporate under notification No. 13/2017-CTR (Sl. No. 6) dated 28.06.2017.
Whether supply of food or beveragesin cinema hall is taxable as restaurant service:
3.References have been received requesting for clarification whethersupply of food and beverages at cinema halls is taxable as restaurant service which attractGST at the rate of 5%or not.
3.1As per Explanation at Para 4 (xxxii) to notification No. 11/2017-CTR dated 28.06.2017, “Restaurant Service’ means supply, by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied.”
3.2Eating joint is a wide term which includes refreshment or eating stalls/ kiosks/ counters or restaurant at a cinema also.
3.3The cinema operator may run theserefreshment or eating stalls/ kiosks/ counters or restaurant themselves or they may give it on contract to a third party. The customer may like to avail the services supplied by these refreshment/snack counters or choose not to avail these services. Further, the cinema operator can also install vending machines, or supply any other recreational service such as through coin-operated machines etc. which a customer may or may not avail.
3.4It is hereby clarified that supply offood or beverages in a cinemahall is taxable as ‘restaurant service’as long as:a)the food or beverages are supplied by way of or as part of a service,andb)supplied independent of the cinema exhibition service.
3.5It is further clarified that where the sale of cinema ticket and supply of food and beveragesare clubbed together, and such bundled supply satisfies the test of composite supply, the entire supply will attract GST at the rate applicable to service of exhibition of cinema, the principal supply.
4.Difficulties, if any, in implementation of this circular may be brought to the notice of the Board.
Yours faithfully, (Rajeev Ranjan)
Under Secretary, TRU
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