Facts of the Case:

In this case, the applicant is engaged in the business of operating a hotel offering various services such as accommodation, banqueting, dining and allied hospitality services. The hotel is classified as a “specified premises” for the relevant financial year under the Goods and Services Tax law. The applicant operates an in-house restaurant catering both to resident guests of the hotel as well as walk-in customers. The restaurant does not have a separate takeaway or over-the-counter sale counter. The restaurant menu includes food items as well as aerated beverages such as carbonated drinks and soft beverages. Customers may order aerated beverages either along with food or independently.

When aerated beverages are ordered, the restaurant staff opens sealed bottles/cans, pours the beverage into glassware, and customises it by adding ice, lemon, sugar syrup or spices, and in some cases prepares value-added drinks such as masala coke or fresh lime soda. These beverages are consumed within the restaurant premises or supplied as room service. The applicant had been charging GST at 28% plus compensation cess on aerated beverages treating them as a supply of goods, even when billed along with food in the same invoice, while charging GST at 18% on restaurant services. In several cases, value-added beverages such as masala coke or fresh lime soda are prepared using aerated water as an ingredient. These beverages are served at the table or supplied as room service and are consumed within the restaurant or hotel premises.

The applicant sought an advance ruling on the applicable rate of GST on supply of aerated beverages when supplied independently and when supplied along with food in the restaurant.

Issue:

Whether the supply of aerated beverages by a hotel restaurant, when supplied independently without food, constitutes an independent supply of goods taxable at the rate applicable to aerated waters.  Whether the supply of aerated beverages along with food in a restaurant constitutes a composite supply, and if so, the applicable rate of GST.

Held that:

The Authority for Advance Ruling held that, on the facts presented, the supply of aerated beverages by the applicant’s restaurant, whether supplied along with food or supplied independently constitutes a composite supply within the meaning of Section 2(30) of the CGST Act. It was observed that the aerated beverages are not sold as sealed products across a counter, but are prepared, customised and served by restaurant staff using the infrastructure, ambience and services of the restaurant, and are consumed within the restaurant or supplied as room service.

The Authority further held that such supply squarely falls under Clause 6(b) of Schedule II to the CGST Act, which deems the supply of food or any drink (other than alcoholic liquor) by way of or as part of any service to be a supply of service. The principal supply in the transaction is restaurant service, and the supply of aerated beverages is naturally bundled with such service in the ordinary course of business.

Accordingly, the supply qualifies as “restaurant service” as defined in Notification No. 11/2017–Central Tax (Rate). Since the restaurant is located in a hotel classified as a specified premises, the applicable tax rate is that prescribed under Serial No. 7(vi) of the said notification. The Authority ruled that GST is payable at 9% CGST and 9% SGST on the supply of aerated beverages, irrespective of whether they are supplied independently or along with food, as both situations amount to a composite supply of restaurant service.

Case Name: In Re: M/s. Summit Hotels & Resorts Private Limited dated 10.12.2025

To read the complete judgement 2025 Taxo.online 3298