In re Citius Holidays Private Limited (GST AAR West Bengal)

FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, WEST BENGAL

1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression ‘GST Act’ would mean the CGST Act and the WBGST Act both.

1.2 The applicant operates within the Event Management and Tourism Services industry. In the context of event management, the applicant is required to provide food and beverages, in addition to other services such as the rental of hotels or properties, and the organization of tours. These services are offered to corporate clients for offsite meetings, conferences, training programs, and similar events.

1.3 The applicant has made this application under sub section (1) of section 97 of the GST Act and the rules made there under raising following questions vide serial number 14 of the application in FORM GST ARA-01:

(i) Eligibility to avail Input Tax Credit (ITC) on food and beverage services under Section 17(5) in event management and tourism services.

(ii) Requirement of separate invoices from hotel vendors for claiming ITC on food and beverage services.

(iii) Correct method of invoicing to clients for event packages including food and beverage services.

(iv) Whether the applicant is eligible to claim ITC when the food and beverage invoice is raised by the hotel to the applicant, and the applicant charges the client a margin and issues its own invoice for the same?

(v) In cases where the charges for the conference hall and food are inseparable, and the hotel invoices the amount under a single head (such as ―conference package‖), is the applicant eligible to avail ITC on the entire value?

(vi) Where the hotel provides a package deal including room accommodation, conference hall, and food, and issues a consolidated invoice, is the applicant eligible to avail ITC on the total invoice amount?

1.4 The questions on which the advance ruling is sought for are found to be covered under clause (d) of sub-section (2) of section 97 of the GST Act.

1.5 The applicant states that the questions rose in the application neither have been decided by nor is pending before any authority under any provision of the GST Act.

1.6 The application is, therefore admitted.

Submission of the Applicant

2.1 The applicant states that

• The applicant is engaged in event management and Tours & travel services, including booking of hotels, conference rooms, and arranging meals for participants as part of a comprehensive business package.
• These services are offered to corporate clients for offsite meetings, conferences, training programs, and similar events.
• The hotel provides the applicant bundled services: room accommodation, conference space, and food (buffet/lunch/dinner/tea/snacks).
• A single invoice is generally issued by the hotel to the applicant showing these components (sometimes itemized, sometimes bundled).
• The applicant charges the client a consolidated event management fee which includes these components.

2.2 The applicant‘s interpretation of law/facts:

(a) ITC on Food and Beverage Services:

• • Section 17(5)(b)(i) disallows ITC on food and beverages unless used for making outward taxable supplies of the same category or as an element of a composite or mixed supply.
  • The applicant‘s outward supply is a taxable bundled service that includes food and beverages, thereby falling under the exception clause of the proviso.
  • As clarified in CBIC Circular No. 172/04/2022-GST dated 6th July 2022, ITC on food and beverages is allowed when part of a composite supply.

• Section 17(5)(b)(i) disallows ITC on food and beverages unless used for making outward taxable supplies of the same category or as an element of a composite or mixed supply.
• The applicant‘s outward supply is a taxable bundled service that includes food and beverages, thereby falling under the exception clause of the proviso.
• As clarified in CBIC Circular No. 172/04/2022-GST dated 6th July 2022, ITC on food and beverages is allowed when part of a composite supply.

(b) Requirement of Separate Invoice:

• • Section 16(2) requires possession of a valid tax invoice to claim ITC, but GST law does not mandate separate invoicing for each component.
  • A single itemized invoice (if available) or consolidated invoice covering room, food, and hall is sufficient, if GST is charged appropriately and other conditions under Section 16 are met.
  • Reference: CBIC Circular No. 123/42/2019-GST dated 11th November 2019.

• Section 16(2) requires possession of a valid tax invoice to claim ITC, but GST law does not mandate separate invoicing for each component.
• A single itemized invoice (if available) or consolidated invoice covering room, food, and hall is sufficient, if GST is charged appropriately and other conditions under Section 16 are met.
• Reference: CBIC Circular No. 123/42/2019-GST dated 11th November 2019.

(c) Invoicing to Clients:

• • Section 8 of the CGST Act provides that in a composite supply, the tax rate of the principal supply applies to the entire transaction.
  • Event management is the dominant supply in this case, attracting 18% GST.
  • Issuing a single invoice at 18% ensures uniformity and avoids ITC complications for clients. Separate invoicing for food at 5% may trigger ineligibility of ITC as per Section 17(5).

• Section 8 of the CGST Act provides that in a composite supply, the tax rate of the principal supply applies to the entire transaction.
• Event management is the dominant supply in this case, attracting 18% GST.
• Issuing a single invoice at 18% ensures uniformity and avoids ITC complications for clients. Separate invoicing for food at 5% may trigger ineligibility of ITC as per Section 17(5).

(d) Food Invoice with Margin:

• • Where the hotel raises the food invoice to the applicant and the same is invoiced to the client with a margin, it becomes part of the applicant‘s outward taxable supply, thereby qualifying for ITC.
  • The margin does not alter the character of the supply being taxable, hence the inward supply of food used in providing outward taxable services should be ITC-eligible.

• Where the hotel raises the food invoice to the applicant and the same is invoiced to the client with a margin, it becomes part of the applicant‘s outward taxable supply, thereby qualifying for ITC.
• The margin does not alter the character of the supply being taxable, hence the inward supply of food used in providing outward taxable services should be ITC-eligible.

(e) Inseparable Charges – Conference + Food:

• • Where food is not billed separately but is part of a combined package with the conference facility, and the total supply is taxable and used for business, the entire value should qualify for ITC under the composite supply principles.
  • The food component, though inseparable, contributes to the business output service and falls within the exception of Section 17(5).

• Where food is not billed separately but is part of a combined package with the conference facility, and the total supply is taxable and used for business, the entire value should qualify for ITC under the composite supply principles.
• The food component, though inseparable, contributes to the business output service and falls within the exception of Section 17(5).

(f) Package Deal – Room, Hall, Food:

• • In a package where all components are billed together by the hotel, the service qualifies as a composite supply. If the package is used for providing outward taxable supply (e.g., to clients as part of event management), the entire inward supply, including food, becomes eligible for ITC.
  • This aligns with the interpretation of proviso to Section 17(5)(b)(i) and related CBIC circulars

• In a package where all components are billed together by the hotel, the service qualifies as a composite supply. If the package is used for providing outward taxable supply (e.g., to clients as part of event management), the entire inward supply, including food, becomes eligible for ITC.
• This aligns with the interpretation of proviso to Section 17(5)(b)(i) and related CBIC circulars

2.3 The applicant‘s interpretation of law/facts:

1.1 The Legal Gateway: Proviso to Section 17(5)(b)(i)

The entire argument for ITC eligibility rests on the Proviso to Section 17(5)(b)(i) of the Central Goods and Services Tax (CGST) Act, 2017. While the main clause generally blocks ITC on “food and beverages,” the Proviso creates a statutory exception: ITC is allowed where the inward supply of F&B is used by the applicant “as an element of a taxable composite or mixed supply”.

1.2. The Applicant’s Position (Composite Supply Re-supply)

The applicant’s outward supply—the event package (hall, F&B, coordination)—is defined as a Composite Supply under Section 2(30) of the CGST Act. The Principal Supply is the Event Management Service (SAC 9983 or 9963), which attracts a mandatory 18% GST rate. Since the F&B is merely an auxiliary component of this principal 18% service, the blockage under Section 17(5)(b) is cured, and the ITC must be allowed. This position is supported by rulings such as that given to M/s. Indian Society of Critical Care Medicine.

1.3. Critical Compliance Requirement: The 18% Inward Rate

The only non-negotiable factor is that the inward supply from the hotel must be charged at 18% GST. If the hotel charges the concessional 5% rate (applicable to Non-Specified Premises where ITC is not available to the hotel), the ITC cannot be passed on to the applicant, regardless of the applicant‘s eligibility under the Proviso, as demonstrated by the Gujarat AAR in the case of Mangaldas Mehta & Company Ltd..

2. Argumentative Stances and Legal Bases (Question-by-Question)

Question (1): Whether the applicant is eligible to avail Input Tax Credit (ITC) on inward supplies of food and beverages used for providing outward taxable bundled services such as event management, including conference room bookings and corporate events, where food is provided as part of the package?

It is not an expense for internal consumption..

The F&B is ancillary, not principal. The client pays for the coordinated event (the conference) making Event Management the Principal Supply. The provision of food is naturally bundled and essential to the completion of this service, thereby losing its standalone blocked status under the Composite Supply framework.

This position is supported by Advance Rulings which have noted that ITC on food and beverages supplied by outside caterers should be available when applicant uses such inward supply “as an element of an outward supply for meeting and conferences which will create a higher Sale”.

The applicant organized conferences sed and offered delegates a composite package including technical seminar accommodation, and F&B.

Judgment: ITC was held admissible on F&B supplied by hotels and outside caterers, affirming that the input F&B was used as an element of the outward taxable event organization service.

Question (2): Whether a single invoice from the hotel (for room rent, conference hall, and food) is sufficient for availing ITC on all components, including food, or is a separate invoice for food mandatory for availing ITC under Section 17(5)(b)?

The law governing Composite Supplies dictates that rate of the principal supply applies to the entire bundle. Since the F&B component is absorbed into the composite nature of the supply, the entire value, if charged at 18% GST by the hotel, is a creditable business input for the applicant’s subsequent tax supply.

The absence of a separate line thite m for F&B does not invalidate the ITC claim, as there is no statutory mandate to bifurcate naturally bundled compon for the purpose of claiming the exception under Section 17(5)(b).

Question (3): Whether the applicant should: (a) Issue a single invoice for the entire event package (event management, accommodation, food) charging 18% GST; or (b) Issue separate invoices— one for event services @18% and another for food @5%—to comply with GST classification?

Section 8(a) legally mandates that the transaction “shall be treated as a supply of such principal supply”.

Question (4): Whether the applicant is eligible to claim ITC when the food and beverage invoice is raised by the hotel to the applicant, and the applicant subsequently charges the client for the same services along with a margin by issuing its own invoice?

The applicant remitted Service Tax on event management services provided by a third party to facilitate the organization of a dealer/retailer meet for promotion, marketing, advertisement, and promotion of its products. Judgment:

Credit was allowed on these expenses, establishing the commercial principle that expenses linked directly to generating taxable output are eligible for credit, overcoming the general blocked credit restriction.

Question (5): In cases where the charges for the conference hall and food are inseparable, and the hotel issues a single invoice under a combined heading such as ―conference package” or ―banquet package,” without separate line items for food and hall rent, whether the applicant is eligible to avail ITC on the entire value of such invoice?

This supports the argument that the lack of internal segregation on the supplier’s invoice does not invalidate the ITC claim when the nature of the service received is inherently composite and charged at the 18% rate required for credit pass-through.

Question (6): Where the hotel provides a comprehensive package deal that includes room accommodation, use of the conference hall, and food and beverage services, and issues a consolidated invoice for the entire package without separately identifying each component, whether the applicant is eligible to avail full ITC on the total invoice amount?

The eligibility is entirely contingent on the hotel’s status as a ‘Specified Premises’.

strict: accommodation and
F&B services are taxed at 18% with ITC only if the declared room tariff for any room exceeds ₹7,500 (Specified Premises).

This blockage occurs upstream via the Rate Notification, making the credit definitively unavailable to the applicant.

Summary of Eligibility based on Hotel’s Rate (Critical Defense Point)

Therefore, the applicant seeks a clear determination under Section 97(2)(d) and (e) regarding admissibility of ITC on such inward supplies.

3. Submission of the Revenue

3.1 The concerned officer has not expressed any view on the merit of the instant case.

4. Observations & Findings of the Authority

4.1 We have gone through the records of the issue as well as submissions made by the authorized representative of the applicant during personal hearing. The Revenue has made no submission on the merit of the case.

4.2 As per the statement furnished, the applicant is engaged in event management and tours and travel Services. The areas of activities of the applicant include booking of hotels, conference rooms and arranging meals for participants as part of a comprehensive business package. The Applicant is also required to provide other services such as the rental of hotels or properties, and the organization of tours. These services are offered to corporate clients for offsite meetings, conferences, training programmes and similar events.

The applicant procures the above services from the hotels . They provide bundled services to the applicant. The bundled services provided to the applicant include room accommodation, provision for conference space and food (buffet/lunch/ dinner/tea/ snacks). The hotels generally issue a single invoice showing the components of the bundled services. Sometimes the hotels issue invoice to the applicant showing the entire amount as bundled service without any bifurcation of the elements included in such services. The applicant, in turn, charges the client a consolidated event management fee which include these elements.

4.3 The applicant has raised the following questions:

1. Whether the applicant is eligible to avail Input Tax Credit (ITC) on food and beverage services under Section 17(5) in event management and tourism services?

2. Whether separate invoices are required from hotel vendors for claiming ITC on food and beverage services?

3. What is the correct method of invoicing to clients for event packages including food and beverage services?

4. Whether the applicant is eligible to claim ITC when invoice is raised by the hotel to the applicant for food and beverage separately, and the applicant charges the client a margin over it and issues its own invoice for the same?

5. In cases where the charges for the conference hall and food are inseparable, and the hotel issues invoice for the entire amount under a single head (such as ―conference package‖), is the applicant eligible to avail ITC on the entire value?

6. Where the hotel provides a package deal including room accommodation, conference hall, and food, and issues a consolidated invoice, is the applicant eligible to avail ITC on the total invoice amount?

4.4 The applicant believes that Section 17(5)(b)(i) of the CGST Act restricts the enjoyment of ITC on food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft, life insurance, and health insurance unless such goods or services are used by a registered person for making an outward taxable supply of the same category of goods or services or as an element of a taxable composite or mixed supply.

In the applicant‘s case, food and beverage services are provided as part of a bundled supply that includes event management services, which are taxable. Therefore, the provision of food and beverages is an element of both same category and taxable composite supply, making the applicant eligible to avail ITC on these services.

The applicant has argued that Section 16(2) of the CGST Act stipulates that a registered person can claim ITC only if they are in possession of a tax invoice or deemed tax invoice issued by a supplier. There is no explicit requirement under GST law mandating separate invoices for different components of a bundled supply. A single itemized invoice from the hotel, clearly detailing the charges for room rent, conference hall, and food, is sufficient for the applicant to claim ITC on all components, provided the invoice complies with the requirements of Section 16(2).

4.5 The first issue placed before us is related to the eligibility of Input Tax Credit (ITC) on food and beverage services under Section 17(5) in event management and tourism services.

The applicant is engaged in event management and tours and travel services. For event management services as a comprehensive package the applicant has to undertake the responsibility of booking hotels, conference rooms and arranging meals for participants.

These services are offered to corporate clients for offsite meetings, conferences, training programmes and similar events.

As we know, the eligibility for ITC has been enumerated in Section 16(2) of the CGST Act, 2017. The relevant portion of the section is reproduced here.

(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,-

(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;

(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37;]

(b) he has received the goods or services or both.

[Explanation.- For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services-

(i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;

(ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person;

(ba) the details of input tax credit in respect of the said supply communicated to such registered person under section 38 has not been restricted;

(c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and

(d) he has furnished the return under section 39;

The above mentioned grounds of eligibility of availing ITC are, however, subject to the provisions of section 17(5). The relevant portion of this section is reproduced here.

(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely:-

(a) ……………………………………………….

(aa) ……………………………………………….

(ab) ……………………………………………….

(b) the following supply of goods or services or both-

(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance:

Provided that the input tax credit in respect of such goods or services or both shall be available where an inward supply of such goods or services or both is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply;

(emphasis added)

4.6 So the pertinent question is whether the service provided by the applicant in the form of event management and tourism services is either a composite supply or a mixed supply. Reply to this question is a key to answer some other questions raised in this application for advance ruling.

First of all, we should look into the definition of composite supply as provided in Section 2(30) of the CGST Act, 2017. According to this section, “composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply.

Illustration: Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply.

On the other hand, Section 2(74) of the CGST Act, 2017 provides that “mixed supply” means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply.

Illustration.- A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately

The GST Act nowhere defines event management service. Event management is an important service in the contemporary society. As a trade practice it encompasses a wide range of services, including planning, organizing, hosting, promoting, conducting any kind of services such as festivals, conferences, ceremonies, weddings, formal parties, concerts, conventions and marriages, from booking the venue to organising the party.

Managing the events starts from procuring order and selecting the venue. After the venue is booked event managers dedicate time for elaborate planning for organizing the event. The plans vary according to the nature of the events. Arrangement of accommodation of rooms for the guests coming to the event, booking of a banquet hall or other hall, arrangement of necessary infrastructures in the hall according to the nature of the event, decoration of the venue of event as per requirement, provisions for transportation of guests, provisions for food and beverages and other entertainments for guests are all parts of event management. It is an array of so many things and services and all of them contribute to what we call event management. In most of the cases it comes as a package consisting of all the things mentioned above.

So it appears that event management involves supply of various kinds of goods and services in a bundled form. It satisfies the definition of composite supply under section 2(30) supra. Here the principal supply is management of event and other supplies of goods and services e.g. provision of food and beverages, booking of venue, booking of hotel rooms etc. are all ancillary services.

4.7 Once it is decided that event management service is a composite supply, the next point to be considered is whether in the applicant‘s case ITC on food and beverages being part of further composite supply of event management attracts the proviso to Section 17(5)(b) (i). The proviso mandates that the registered person must either make an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply in order to get the benefit of the proviso. In our case the applicant makes an outward supply of event management which is taxable supply and foods and beverages are supplied as an element of outward composite supply of event management. So in our considered view, the applicant is eligible for availing Input Tax Credit on food and beverage services under the proviso to Section 17(5) for carrying out event management services which includes supply of foods and beverages.

4.8 It is understood during the course of personal hearing that the applicant‘s case is that he gets order for organising events for his clients at selected venue. It inter alia includes booking of hotels, conference rooms, decorating the venue, organising the events and rranging meals for participants as part of a comprehensive business package. For this purpose the applicant procures the entire supply including foods and beverages from the hotel. The hotel, being the supplier of services raises a single invoice against this supply. In this leg of transaction what the hotel supplies as services is a composite supply which inter alia includes supply of room, banquet or hall and its related facilities and foods and beverages. Here the individual elements of the supply lose its identity as a supply. The entire supply is regarded as a composite supply of event management services or banquet hall services. It is quite logical for the hotel, being supplier of services to issue a single invoice. The applicant, in turn, raises a single invoice to his recipient describing the service as event management service. So a single invoice issued by the hotel is sufficient for the applicant to avail ITC under section 16 read with Section 17(5) of the CGST Act, 2017 subject to the fulfillment of other conditions for availing ITC as per the provisions of Section 16 and also subject to the condition that the hotel should have charged the tax rate applicable to the principal supply of event management service or banquet hall service, whichever is applicable. Nowhere in the GST Act there is any specific requirement for separate invoices for the individual elements of a composite supply in order to entitlement for ITC in respect of the recipient.

4.9 The applicant is providing event management services to its customers. Since it is a composite supply, the individual elements of the supply (for example, food and beverages) lose its individual identity as separate service. All the other services become ancillary to the principal supply of event management service. The applicant may show in his invoice the break ups of different heads of services provided to the customer but the tax rate is to be charged according to the principal supply i.e. supply of event management services.

4.10 The applicant has referred to a specific situation where the hotel supplies food to the applicant and raises invoice for food to the applicant and the applicant supplies the same to his client adding a margin. Here the food is used by the applicant either for making further taxable supply of food or as an element of taxable composite supply of event management services. In our considered view, in both the cases the applicant is eligible for ITC subject to the provisions of Section 16 of the CGST Act, 2017. However, it should be noted that in case the applicant is using this food as an element of composite supply ibid the invoice of the applicant issued to his customer must charge the rate of tax applicable to the principal supply as determined in the foregoing parts of our discussion for the whole consideration including food. Here the factor of adding margin over the value paid to the hotel for food does not have any specific impact both in terms of the nature of outward supply of the applicant and his eligibility for ITC.

In view of the foregoing discussion, we rule as under:

RULING

Q.1 Whether the applicant is eligible to avail Input Tax Credit (ITC) on food and beverage services under Section 17(5) in event management and tourism services?

Answer: The answer is in the affirmative.

Q.2 Whether separate invoices are required from hotel vendors for claiming ITC on food and beverage services?

Answer: No, there is no such specific requirement in the provisions of the CGST Act, 2017.

Q.3 What is the correct method of invoicing to clients for event packages including food and beverage services?

Answer: This question is not covered by the scope of question mentioned in Section 97(2) of the CGST Act, 2017. So no answer is given to this question.

Q.4 Whether the applicant is eligible to claim ITC when invoice is raised by the hotel to the applicant for food and beverage separately, and the applicant charges the client a margin over it and issues its own invoice for the same?

Answer: The answer is in the affirmative. However, it should be noted that in case the applicant is using this food as an element of composite supply of event management services the invoice of the applicant issued to his customer must charge the rate of tax applicable to the principal supply and the applicant can avail ITC in respect of food as one of the elements of taxable composite supply of event management.

Q.5 In cases where the charges for the conference hall and food are inseparable, and the hotel issues invoice for the entire amount under a single head (such as “conference package”), is the applicant eligible to avail ITC on the entire value?

Answer: The answer is in the affirmative.

Q.6 Where the hotel provides a package deal including room accommodation, conference hall, and food, and issues a consolidated invoice, is the applicant eligible to avail ITC on the total invoice amount?

Answer: The answer is in the affirmative.