The West Bengal Authority of Advance Ruling (AAR) has held that accommodation and food service by hotel exceeding Rs.7500 attracts 18% GST.
The bench of Shafeeq S and Jaydip Kumar Chakrabarti has observed that the separate restaurant services provided in the hotel premises to walk-in guests will be taxable under serial no. 7 (ii) of Notification No. 11/ 2017- Central Tax (Rate) Dated 28.06.2017 as amended read with the corresponding State Tax notification as amended considering the recent Notification No. 05/2025- Central Tax (Rate) Dated 16.01.2025 since the hotel premises is not a “specified premises” for financial year 2025-26 as per data furnished by the applicant. In that case the tax rate will be 2.5% CGST + 2.5% SGST subject to the condition prescribed in column 5 of the table in the said notification for financial year 2025-26.
The bench clarified that if in any ongoing Financial Year, the hotel charges a rate of above Rs. 7,500/- for any unit of accommodation (inclusive of the food charges in the applicable plan, even if indicated separately in the invoices), the premises shall qualify to be considered as “specified premises” for the next Financial Year and appropriate rate of GST at 9% CGST + 9% SGST shall apply for the restaurant services provided to walk-in guests.
The applicant is engaged in the hotel business through its property named Orsino Spa Resort (formerly known as Hotel Pine Tree Spa Resort) located in Darjeeling. The resort comprises 45 rooms and offers various amenities such as a spa, banquet facilities, a bar, a multi-cuisine restaurant, and a cafe. The hotel offers various meal plan options along with the accommodation service as per the industry practices like AP, CP, EP. In the American Plan (AP) all the 3 meals i.e. breakfast +lunch +dinner is included. In the Continental Plan (CP), breakfast is included and in the European Plan (EP), it is the most basic plan providing only accommodation service. Therefore, such supplies provided under AP, CP plan constitute a composite supply under GST. In addition, the hotel also provided separate restaurant services to the walk- in- guests.
The applicant sought the advance ruling on the issue of classification and applicable GST rate for the food component provided under the American Plan (AP) or Continental Plan (CP) when the total value of the combined supply (AP, CP) exceeds Rs. 7,500 and the tax invoice distinctly enumerates the two supplies separately?
Another issue raised was in respect of the separate restaurant services provided to walk in guests shall be taxable at which rate considering the recent Notification No. 05/2025 Central Tax (Rate) dated 16.01.2025?
The AAR held that under the American Plan (AP) or Continental Plan (CP), the food component will have no separate treatment for the purpose of taxation, since it is clearly a case of “composite supply”. If the total value of the combined supply (accommodation and food) exceeds Rupees Seven thousand five hundred it will be taxable under serial no. 7(vi) and the tax rate will be 9% CGST + 9% SGST.
Ruling Details
Applicant’s Name: Orsino Hotels & Resorts LLP
Ruling Date: 22/08/2025
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