OFFICE OF THE COMMISSIONER COMMERCIAL TAXES,
JAMMU & KASHMIR GOVERNMENT,
EXCISE & TAXATION COMPLEX,
RAIL HEAD, JAMMU-180012
Clarification No. 09 of 2006-07 No.Clari/b/20/121227 Dated 14th August 2006
Hakeem Mohi-ud-din Advocate has vide appliction dated 04-07-2006 sought clarification on the following poinst:
"1. That Service Tax upon lodgings and boardings in a hotel has been levied since 1997 and has been retained even at present vide SRO-86 dated March, 2005.
2. That no tax/service tax is leviable upon lodgings and boardings provided ina hotel since -01-04-2002 in view of SRO 123 dated July 2002 for any Sales Tax leviable upon sale of eatables in a restaurant etc. under SRO 216, SRO 19 etc. but VAT is levied upon sale of eatables ina restaurant, hotel or eating house vide SRO 98 w.e.f.01-04-2006 and Service Tax upon boarding w.e.f.01-04-2006 but no tax in the shape of Service Tax can be levied upon lodgings upto 31-03-2007 as per SRO 23.
3. That it is also to be clarified as to whether the food components provided under the scheme of MAPR or AP etc. are to be taxed separately udner Value Added Tax Act or a composite tax is to be charged and when a hotel or a guest house or restaurant is leased out to any other person from outside the State, who has to bear the brunt of tax either under the J&K Value Added Tax Act, 2005 or J&K GST Act, 1962.
4. That whether or not Input TAx Credit is to be allowed on the purchases tob e used in a restaurant, hotel or eating house on the purchase made by an assessee on this account, when the same are consumed directly or indirectly in the said business establishments".
The matter hs been examined and is clarified as under:-
1 & 2. Services in the form of lodging facilities provided by hotels were brought within the ambit of definition of goods under the J&K GST Act, 1962 vide Act X of 1997 and such transaction is deemed to be a sale by the person making the same.
Vide SRO 123 dated 29-03-2002 the services and amenities provided in the hotels, houseboats, guest houses, lodges, etc. by way of right of use of accommodation and related facilities but excluding supply and sale of food and beverages have been exempted from payment of Sales Tax from 01-04-2002 to 31-03-2007.
Subsequently, vide SRO 216 dated 02-07-2003 the sale food or any articles of food or eatables supplied or served in any manner in the hotels, restaurants and dhabas registered with the Sales Tax Department was exempted from payment of tax for the yeaqr 2003-2004 and thereafter the exemption was extended upto 31-03-2005 in the first instance vide SRO 63 dated 29-02-2004 andlater upto 31-03-2006 vide SRO 90 dated 04-04-2005. Such sales are taxable w.e.f. 01-04-2006 in terms of SRO 98 dated 23-03-2006.
SRO 86 dated 30-03-2005 did not in anyway alter this position but only pruned off the tax schedules (SRO 137 dated 28-04-2000) to include only the non-vatable goods taxable underthe J&K General Sales Tax Act, 1962.
3. a) In case a composite charge is payable in respect of food and drink and residential accomodation then food and drink, are to be taxed separately under the J&K Value Added Tax Act, 2005. This would necessitate separate registrations one for services in the form of lodging facilities under the J&K GST Act, 1962 and the other for sale of food and drink under the J&K VAT Act, 2005 because the two activities are covered by two different enactments. However there will be only one Tax Identification Number (TIN) for both the activities. Those dealers who were registered under the J&K General Sales Tax Act, 1962 for both the activities need not apply afresh for registration udner the J&K General Sales Tax Act, 1962 but they must have a separate registration certificate under the J&K VAT Act, 2005 as provided in Rule 13(2) of the J&K VAT actvities will however have to apply for separate registrations. So far as registration unde the Central Sales Tax Act, 1956 is concerned there will be only one registration for both the activities. However, the liabilities falling under the J&K VAT Act, 2005 and the General Sales Tax Act, 1962 will be assessed by one officer, Order in this regard is being issued separately :
b) Under section 4 of the J&K GST Act, 1962 and Section 12 of the J&K VAT Act, 2005 liability to tax is that of the `dealer' and the `dealer' has been defined in both the enactments. Leasing out a hotel or guest house or restaurant would not alter this position of law.
All the same if the ownership of the business is entirely transferred to any other persons the liability to tax is governed by Sub-section (3) of Section 21 of J&K GST Act, 1962 and Section 98 of the J&K VAT Act, 2005.
4. Input Tax Credit is available on such purchases but strictly in accordance with the relevant provisions of the J&K VAT Act, 2005.However on the items consumed indirectly in the "business establishment" input tax credit is not available.
Sd/-
(Bashir Ahmed)IAS
Commissioner Commercial Taxes