164/20/2021-GST : Clarifications regarding applicable GST rates & exemptions on certain services.

Circular No. 164 /20 /2021-GST CBIC-190354/207/2021-TO (TRU-II)-CBEC Government of India Ministry of Finance Department of Revenue (Tax Research Unit) ***** North Block, New Delhi, Dated the 6th October, 2021 To, The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioner of Central Tax (All), The Principal Director Generals/ Director Generals (All) Madam/Sir, Sub: Clarifications regarding applicable GST rates & exemptions on certain services–reg. Representations have been received seeking clarification in respect of applicable GST rates on the following activities: 1. Services by cloud kitchens/central kitchens, 2. Supply of ice cream by ice cream parlors, 3. Coaching services to students provided by coaching institutions and NGOs under the central sector scheme of „Scholarships for students with Disabilities”, 4. Satellite launch services provided by NSIL. 5. Overloading charges at toll plaza, 6. Renting of vehicles by State Transport Undertakings and Local Authorities, 7. Services by way of grant of mineral exploration and mining rights attracted GST, 8. Admission to amusement parks having rides etc. , 9. Services supplied by contract manufacture to brand owners or others for manufacture of alcoholic liquor for human consumption. 2. The issues have been examined by GST Council in the 45rd meeting of the Council held on 17th September, 2021. The issue-wise clarifications are given below: 3. Services by cloud kitchens/central kitchens: 3.1 Representations have been received requesting for clarification regarding the classification and rate of GST on services rendered by Cloud kitchen or Central Kitchen. 3.2 The word „restaurant service‟ is defined in Notification No. 11/2017 – CTR as below: - „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 Circular No. 164 /20 /2021-GST premises where such food or any other article for human consumption or drink is supplied.‟ 3. 3 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. 3.4 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]. 4. Supply of ice cream by ice cream parlors 4.1 Representations have been received requesting for clarification regarding the supplies provided in an ice cream outlet. 4.2 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. 4.3 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%. 5. Coaching services supplied by coaching institutions and NGOs under the central sector scheme of ‘Scholarships for students with Disabilities” 5.1 Representations have been received seeking clarification regarding applicability of 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. 5.2 In this regard, it is to mention that 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 Circular No. 164 /20 /2021-GST for which total expenditure is borne by the Central Government, State Government, Union territory administration. 5.3 The scope of this entry is wide enough to cover coaching services provided by coaching institutions and NGOs under the central scheme of „Scholarships for students with Disabilities” where total expenditure is borne by the Government by way of funding to institute providing such coaching. 5.4 Accordingly, as recommended by the GST Council, it is clarified that services provided by any institutions/ NGOs under the central scheme of „Scholarships for students with Disabilities” where total expenditure is borne by the Government is covered under entry 72 of notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017 and hence exempt from GST. 6. Satellite launch services provided by NSIL. 6.1 Representation has been received for issuance of a clarification recognizing 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‟. 6.2 It has been clarified vide Circular No. 2/1/2017-IGST dated 27.09.2017 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. 6.3 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. 7. GST on overloading charges at toll plaza. 7.1 Representations have been received seeking clarification regarding applicability of GST on Overloading charges collected at Toll Plazas. 7.2 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. 7.3 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. Circular No. 164 /20 /2021-GST 7.4 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. 8. Renting of vehicles to State Transport Undertakings and Local Authorities