In a key tax ruling, the West Bengal Authority for Advance Ruling has clarified that a hotelier must charge 18% Goods and Services Tax (GST) on carbonated beverages supplied to customers as part of restaurant services, including those consumed during dine-in or room service.
The Authority for Advance Ruling bench, comprising Shri Shafeeq S (Member-Central Tax) and Shri Jaydip Kumar Chakrabarti (Member-State Tax), analysed the nature of aerated drink supplies at a hotel’s restaurant. It noted that when these drinks are provided along with food or as part of the overall dining experience on the hotel premises, they form a composite supply dominated by restaurant services. As such, they attract GST at the restaurant service rate of 18%, rather than the higher 28% tax usually applicable on standalone carbonated beverages.
The hotelier had been applying 28% GST with cess on aerated drinks billed separately, arguing that these were distinct from food. However, since there was no over-the-counter sale of sealed bottles and all items were supplied and consumed on the hotel premises, the Authority for Advance Ruling held that the principal supply was restaurant service.
The ruling also noted that even when aerated beverages are ordered independently (without food), they still form part of a composite supply of restaurant service if consumed on the specified premises, such as the hotel’s dining area.
This interpretation clarifies the GST treatment for hoteliers and restaurateurs offering carbonated beverages to dine-in customers, aligning the tax rate with that of overall restaurant services.
