Supply of food and beverages through eating stalls, kiosks, counters or restaurants at a cinema hall but without a cinema ticket will attract Goods and Services Tax (GST) at the rate of 5 per cent, Central Board of Indirect Taxes and Customs (CBIC) said on Tuesday.

However, if food and beverages are bought with a movie ticket as a combo, then the rate would be 12 or 18 per cent, depending upon the price of the ticket.

These are part of a new circular based on a recommendation made by the GST Council in its meeting on July 11. There was some confusion on rates as some multiplexes were charging 18 per cent, some 12 per cent and some even 5 per cent. Keeping this in mind, representations made on whether the supply of food and beverages at cinema halls is taxable as restaurant service, which attracts GST at the rate of 5 per cent or not.

The circular first reproduced the definition of “Restaurant Service’ which means providing food or any drink by a restaurant or eating joint, including a mess or canteen. Food and drinks could be consumed there or can be taken away. Eating joint is a broad term that includes refreshment, eating stalls/ kiosks/ counters or a restaurant at cinema.

“The cinema operator may run these refreshments or eating stalls/ kiosks/ counters or restaurant themselves or they may give it on contract to a third party. The customer may like to avail the services supplied by these refreshment/snack counters or choose not to avail these services,” the circular said. Further, the cinema operator can also install vending machines or supply any other recreational service, such as through coin-operated machines etc., which a customer may or may not avail.

The circular clarified that the supply of food or beverages in a cinema hall is taxable as ‘restaurant service’ as long as the food or beverages are supplied by way of or as part of a service, and supplied independent of the cinema exhibition service. However, “where the sale of cinema ticket and supply of food and beverages are clubbed together, and such bundled supply satisfies the test of composite supply, the entire supply will attract GST at the rate applicable to service of exhibition of cinema, the principal supply,” the circular said.

Composite supply refers to the combination of two goods or goods and services, out of which one is referred to as principal supply based on the significance of the overall supply. Now, there is a dual rate structure for GST on cinema hall tickets. It is 12 per cent if the value is less than ₹100 and 18 per cent for ₹100 plus. This means, if one buys a movie ticket with food/beverage, GST on the total value would be 12 or 18 per cent.

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