Aerated Beverages Served in Hotel Restaurants Taxable at 18% as Composite Restaurant Service: AAR

The West Bengal Authority for Advance Ruling (WBAAR) has held that aerated beverages served in a hotel restaurant—whether supplied along with food or ordered independently—constitute a composite supply of restaurant service and are taxable at 18% GST (9% CGST + 9% SGST), provided the supply is made for consumption within the restaurant or through room service. The bench of Shafeeq S. and Jaydip Kumar Chakrabarti has observed that aerated beverages as served by the applicant are actually consumed in the restaurant using the facilities and infrastructures of the restaurant. So in this case beverages as served by the applicant come as supply of any drink (other than alcoholic liquor for human consumption) as part of the restaurant service provided by the applicant. As such, the supply will qualify as a composite supply under Clause 6(b) of Schedule II, which is to be treated as a supply of service. Here the principal supply being restaurant service will be taxed under Entry no. 7 of the Notification No. 11/2017 – Central Tax (Rate) Dated 28.06.2017, as amended. Since the restaurant is located in the hotel premises of the applicant and the hotel is a ‘specified premises’ for the on-going financial year, the restaurant services of the applicant will be taxed under serial no. 7(vi) of the notification ibid. That is to say, 9% CGST + 9% SGST will be applicable on such supply of services. The ruling was delivered in an application filed by a hotel operator running a three-star property with restaurant facilities in West Bengal. The applicant sought clarity on the applicable GST rate for carbonated drinks (aerated beverages) supplied to guests in two situations: first, when such beverages are supplied along with food as part of a dining experience; and second, when aerated beverages are supplied alone without any accompanying food items. According to the applicant, it had been charging GST at 28% along with applicable compensation cess on aerated beverages, treating them as an independent supply of goods under Notification No. 01/2017–Central Tax (Rate). However, customers disputed this practice and contended that aerated beverages served in a restaurant should attract the same tax rate as restaurant services, namely 18%. The applicant argued that such supplies are naturally bundled with restaurant services and therefore qualify as a composite supply under Section 2(30) read with Section 8 of the CGST Act. During the proceedings, the applicant explained that its restaurant does not engage in over-the-counter or takeaway sales of sealed bottles or cans. Instead, aerated beverages are served as part of the dining experience, involving waiter service, use of restaurant infrastructure, and, in many cases, preparation and customization such as adding ice, lemon, spices, or mixing ingredients to create drinks like masala coke or fresh lime soda. The beverages are consumed within the restaurant premises or supplied through room service. After examining the submissions and relevant provisions of law, the Authority noted that Schedule II, paragraph 6(b) of the CGST Act treats the supply of food or any drink (other than alcoholic liquor) as part of a service as a composite supply of services. The Authority also relied on the definition of “restaurant service” under Notification No. 11/2017–Central Tax (Rate), which includes the supply of food or drinks by a restaurant for consumption on or away from the premises. The WBAAR observed that, in the facts of the case, aerated beverages were inseparably linked with the restaurant service. Even when ordered alone, the beverages were prepared and served using the restaurant’s facilities and staff, and were consumed within the premises. As such, the principal supply in both scenarios remained restaurant service. Accordingly, the Authority ruled that both categories of supply—(i) aerated beverages supplied independently, and (ii) aerated beverages supplied along with food—qualify as a composite supply of service, with restaurant service as the principal supply. Since the restaurant was located in a “specified premises” hotel, the applicable tax rate would be 18% GST under serial number 7(vi) of Notification No. 11/2017–Central Tax (Rate). Ruling Details Applicant’s Name: Summit Hotels & Resorts Private Limited Ruling Date: 10/12/2025 Click Here To Read Ruling Read More: Pursue Statutory Appeal in Alleged Fake GST ITC Case: Delhi High Court

Aerated Beverages Served in Hotel Restaurants Taxable at 18% as Composite Restaurant Service: AAR

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Aerated Beverages Served in Hotel Restaurants Taxable at 18% as Composite Restaurant Service: AAR

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