GST AAR: Accommodation with Food a Composite Supply

The applicant, Orsino Hotels & Resorts LLP, runs a hotel business using its property named Orsino Resort in Darjeeling. The hotel has 45 rooms and it offers various amenities like a spa, banquet facilities, a bar, a multi-cuisine restaurant, and a cafe. The hotel offers accommodation facilities and meal plan options as per industry practices, like American Plan (AP), Continental Plan (CP), and European Plan (EP).

The supplies offered under AP, CP plans constitute a composite supply under GST. The applicant charges GST on the composite supply of services. The applicant filed an application under section 97 of the GST Act, asking the following questions:

(i) What is the appropriate 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?

(ii) The separate restaurant services provided to walk-in guests shall be taxable at which rate in the above case, considering the recent Notification No. 05/2025 Central Tax (Rate) dated 16.01.2025?

As per the West Bengal Authority for Advance Ruling (WBAAR):

• The supply of accommodation with food under the American Plan (AP) or Continental Plan (CP) is a composite supply. If the total value of the combined supply is more than Rs 7,500, it will be taxed under Serial No. 7(vi) of Notification No. 11/2017-Central Tax (Rate), dated 28.06.2017, and the GST Rate would be 18% (9% CGST + 9% SGST).

• As the hotel premises are not a ‘specified premises‘ for the FY 2025-26. Therefore, the restaurant services provided 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. The applicable GST rate will be 5% (2.5% CGST + 2.5% SGST).

• But, in any ongoing financial year, if the hotel charges Rs 7,500 or more for any room, inclusive of food, then for the next financial year, the hotel will be treated as a ‘specified premises’, and restaurant services to walk-in guests will attract 18% GST.