Clarifications regarding applicability of GST on certain services

Circular No.: 201/13/2023-GST
Date of Circular: 1st August 2023
Relevant Sections and Rules:

• CGST Act, 2017:
  • Section 9: Levy of GST
  • Section 168(1): Power to issue instructions
• Notifications Referenced:
  • Notification No. 13/2017-CT(R) dated 28.06.2017 (RCM – Sl. No. 6)
  • Notification No. 11/2017-CT(R) dated 28.06.2017 (restaurant service – explanation para 4(xxxii))

Summary of Clarifications Provided:

1. Reverse Charge Mechanism (RCM) on Renting of Immovable Property by Directors to Companies:
   The GST Council clarified that services supplied by a director to a company in personal capacity, such as renting of immovable property, are not covered under RCM.

• RCM under Sl. No. 6 of Notification No. 13/2017-CT(R) applies only when the director supplies services in the capacity of a director.
• Thus, personal transactions like rent, where the director is acting not as a director but as a private individual, are not liable under RCM.

2. GST on Food and Beverages Supplied in Cinema Halls:
   It is clarified that supply of food and beverages in cinema halls qualifies as restaurant service (taxable at 5% GST without ITC) if:

• (a) the supply is made by way of or as part of a service, and
• (b) such supply is independent of the cinema exhibition service.

This applies to refreshment counters/stalls/kiosks run by cinema operators or third parties.

However, if the cinema ticket and food/beverages are bundled together in such a way that they form a composite supply, the entire supply is taxed at the rate applicable to the principal supply, i.e., cinema exhibition service (18%).

Source: Circular No.: 201/13/2023-GST