Karnataka AAR: Disposed GST Clarification Application from Restaurant Partners as Withdrawn by Applicant

The Karnataka Authority for Advance Ruling resolved the application seeking clarification on Goods and Service Tax (GST) related to utility charges generated by a company from its restaurant partners, as the applicant chose to withdraw their request.

The applicant, Loyal Hospitality Pvt Ltd, under its brand ‘Kitchens @,’ is a trusted provider of centralized remote kitchens wherein the Restaurant Partners are provided all necessary infrastructure like kitchen equipment, tools, utilities, and technological support services designed to meet the unique needs of restaurant and food businesses. There is a service fee set by the applicant.

Read Also: GST Impact on Healthcare Industry in India

Some utility charges including gas, electricity, water charges, and other operational expenses are paid by the restaurant partners and may be incurred by the applicant specific to each restaurant partner. The landlord is responsible for registering the electricity and water connections since the kitchens function within rented building premises. Gas and other utilities, on the other hand, are directly obtained by the applicant from third-party vendors.

The applicant asked for an advance ruling to determine whether the utility charges collected from their restaurant partners are subject to GST under the CGST/KGST Act.

Similar: Kar AAR: No GST Levy on Exempted Healthcare Services Under SAC 999311

During a personal hearing, the applicants were provided with the opportunity to present their case. Sri. Ashish Koppa, a Chartered Accountant and Authorized Representative, appeared in the hearing and reiterated their comprehension of the matters for which they sought an advance ruling. However, later on, the applicants expressed to withdraw the application and requested permission from the authorities to do so.

Consequently, a two-member bench of the Authority of Advance Ruling, consisting of Dr. M.P. Ravi Prasad, Additional Commissioner of Commercial Taxes, Member (State), and Kiran Reddy T, Additional Commissioner of Customs & Indirect Taxes, Member (Central), resolved and closed the application seeking clarification on GST concerning the utility charges collected by the company from its restaurant partners following the withdrawal of the applicant’s request.