In a Circular No 27/01/2018-GST dated 4th January 2018, the Ministry of Finance has attempted to clarify certain issues on the levy of GST for specified services.
- Accommodation Services
The Circular clarifies that GST would be levied on the tariff published anywhere. In case the actual amount charged differs from the published tariff, GST would be charged on the actual amount charged. If tariff changes between booking and actual usage, GST would be charged on the published tariff at the time of supply (which, one should assume, would be the time of booking).
Somewhere else in the Circular, it has been stated that Price/ declared tariff does not include taxes and that Room rent in hospitals is exempt. Any service by way of serving of food or drinks including by a bakery qualifies under section 10 (1) (b) of CGST Act and hence GST rate of composition levy for the same would be 5%.
A final clarification on accommodation services states that homestays with a turnover below the threshold of Rs 20 lakhs who provide accommodation services through electronic commerce operators, need not take out a GST registration.
- Casinos and Gambling
The Circular clarifies that GST would be charged @ 28% on the value of admission fees and the total bet value.
- Race Clubs
In the Circular, the Tax Research Unit clarifies that GST would be leviable on the entire bet value i.e. total of face value of any or all bets paid into the totalisator or placed with licensed book makers, as the case may be. As an Illustration, they clarify that if the entire bet value is Rs. 100, GST leviable will be Rs. 28/-.
A critique by GST Garage
The value on which casinos and race clubs have to charge tax has always been unclear. This can be attributed to the needless attempt to frame valuation rules for services way back in 2004. Prior to this, service tax laws had the concept of “ Gross Amount Charged” which should ideally be what GST should be paid on. Casinos and race clubs charge only the entry fee while they collect the other betting money on behalf of the customers. Soon, both these issues are going to land up in the courts. The GST Council would do well to prevent long-winded litigation by removing the valuation requirement for services and going back to the concept of “gross amount charged for services rendered”.
- 4. Publishing/Printing/Selling of books
A lot of questions were asked on whether the following activities were supply of goods or a supply of services:
- The books are printed/ published/ sold on procuring copyright from the author or his legal heir
- The books are printed/ published/ sold against a specific brand name
- The books are printed/ published/ sold on paying copyright fees to a foreign publisher for publishing Indian edition (same language) of foreign books
- The books are printed/ published/ sold on paying copyright fees to a foreign publisher for publishing Indian language edition (translated).
To all the above questions, the Circular has only one answer:
The supply of books shall be treated as supply of goods as long as the supplier
owns the books and has the legal rights to sell those books on his own account.
A critique by GST Garage
A very simple response to lots of questions! However, the response does not clarify who is the supplier. For instance, who would be the supplier if an author decides to self-publish a book through a publisher?
- Legal Services:
The Circular ends by stating that in case of legal services including representational services provided by an advocate including a senior advocate to a business entity, GST is required to be paid by the recipient of the service under reverse charge mechanism, i.e. the business entity.