Page 190 - GSTL_7th May 2020_Vol 36_Part 1

148 GST LAW TIMES [ Vol. 36
these, the applicant is fortified in its opinion that the 18% GST will
apply on room stay plus service charge and not 28% GST.
Opinion in relation to query 4 :
As demonstrated in illustration 2, the tariff of the applicant falls be-
low Rs. 7500/- and hence, in the humble opinion of the applicant
the applicable rate of GST on breakfast, food bill as well as restau-
rant services would be 5% GST in view of the Notification No.
46/2017- CGST (Rate).
Opinion in relation to query 5 :
The applicant states its business is a seasonal business. Like stock
markets, the price fluctuates of rooms. It may happen that the base
tariff i.e. room stay plus service charge exceeds Rs. 7,500/- for a few
days during the year. The applicant states that the room tariff dur-
ing the entire year, however, below Rs. 7500/- and it is only for a ra-
re few days that the tariff shoots up. In order to better explain, the
applicant presents a tabular illustration as below :
Illustration 3 :
Tariff fluctuations and entangled rates :

Period Tariff for rooms Season
1st April to 30th Sept. Below Rs. 7500 Low season
1st October to 31st Jan. Above Rs. 7500 High Season
1st Feb. to 31st March Below Rs. 7500 Low season

As per the Notification No. 46/2017-CGST (Rate), when the tariff of
the hotel is in excess of Rs. 7500/-, the liability to pay GST on res-
taurant arises at 18% and in other cases, it is 5% GST. The Notifica-
tion is absolutely silent on the liability of GST in the event the tariff
remains below Rs. 7500/- for a part of the year and exceeds Rs.
7,500/- during the year mid way or exceeds Rs. 7,500/- for a few
months and falls back below Rs. 7500/- again during the same year.
It is very pertinent to note that the tariff is not decided at the start of
the year. The tariff gets changed like airline rates.
In the humble opinion of the applicant, at the start of the year, it
doesn’t know whether it will be able to sell the rooms at a tariff ex-
ceeding Rs. 7,500/-. This leads to a treacherous situation in the
event the tariff exceeds Rs. 7,500/- on a single day during the year.
According to the applicant, from the day the tariff exceeds Rs.
7,500/- it is liable to pay 18% GST on restaurant services and shall
continue to do so for the period the tariff exceeds Rs. 7500/-. As
soon as the tariff falls back below Rs. 7500/-, the applicant’s liability
to pay GST on restaurant services shifts back to 5% GST. In any
case, the liability to pay GST at 18% can never have a retrospective
applicability.
The applicant further states that when two views are possible one
favouring the applicant has to be adopted and, hence, the applicant
must be ordered to discharge liability on restaurant services at 5%
on days tariff falls below Rs. 7500/- and at 18% only on the days tar-
iff exceeds Rs. 7500/-.
GST LAW TIMES  7th May 2020  190