07.07.2023: GST Council to clarify food, beverage supply at cinema attracts 5% GST: Source

The Goods and Services Tax (GST) Council in its next meeting on July 11 is likely to clarify that the supply of food and beverages at cinemas is taxable at the rate of 5 percent similar to restaurant service, a person familiar with the development said.

“The cinema like cloud kitchen/ take away is also engaged in service in the form of cooking and preparing of food and thus, should get covered under the definition of restaurant services liable to GST at the rate of 5 percent, the fitment committee has recommended, which will be discussed by the Council,” he said.

Where the sale of cinema ticket and supply of eatables such as popcorn or cold drinks etc. are clubbed and sold together, and such bundled supply satisfies the test of composite supply, the entire supply will attract GST at the rate applicable.
“The intention of the government is to cover any place which is supplying food and beverage as a service by way of cooking,” he said.

The cinema industry had represented that the supply of food and beverage for human consumption should be construed as ‘restaurant service’ and thus, liable to GST at 5 percent, without  availment of input tax credit.

Restaurant service means supply, by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied. Eating joint is a wide term which includes refreshment or eating stalls/ kiosks/ counters or restaurant at a cinema also.

Multiplexes are engaged in supplying food and beverage to patrons who come to watch movies in the cinema premises. Such products are processed and cooked inside the cinema premises and served to the patrons to be consumed on the cinema premise or as takeaway. The products cooked by the cinema are specially curated and cooked by the cinema on the premises.

“The food or beverages served in a cinema hall is taxable as restaurant service as long as the food or beverages are supplied as part of a service,” he said.

The cinema operator may run these refreshment or eating stalls/ kiosks/ counters or restaurants themselves or they may give it on contract to a third party. The customer may like to avail the services supplied by these refreshment/snack counters or choose not to avail these services. Further, the cinema operator can also install vending machines, or supply any other recreational service such as through coin-operated machines etc. which a customer may avail or not.

Even in case of fixed eating places at railway platforms, airports or trade exhibitions or food and beverage served in airport/train, wherein an entry ticket is required to access these places, supply of food and beverage at these places is treated as restaurant service and subject to GST at 5 per cent, which has already been issued.

Source: Money Control 

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