Circular No. 201/13/2023-GST: Clarifications on the Applicability of GST on Certain Services
The Government of India has issued Circular No. 201/13/2023-GST, which provides clarifications on the applicability of GST on certain services. The circular addresses two specific issues:
- Whether services supplied by directors in their personal capacity, such as renting immovable property to the company, are taxable under Reverse Charge Mechanism (RCM).
- Whether the supply of food or beverages in a cinema hall is taxable as a restaurant service.
Services Supplied by Directors in Personal Capacity
The circular clarifies that services supplied by a director of a company or body corporate to the company or body corporate in his private or personal capacity, such as services supplied by way of renting immovable property to the company or body corporate, are not taxable under RCM.
This is because the Reverse Charge Mechanism is a mechanism by which the recipient of a taxable supply is liable to pay GST. However, in the case of services supplied by a director in his personal capacity, the company or body corporate is not the recipient of the supply. Instead, the recipient of the supply is the director himself.
Supply of Food or Beverages in Cinema Hall
The circular also clarifies that the supply of food or beverages in a cinema hall is not taxable as a restaurant service. This is because the supply of food or beverages in a cinema hall is ancillary to the main supply of cinema tickets.
The main supply of cinema tickets is the provision of entertainment services to the customer. The supply of food or beverages is simply a way for the cinema hall to provide additional value to its customers.
Conclusion
Circular No. 201/13/2023-GST provides important clarifications on the applicability of GST on certain services. These clarifications will help businesses to understand their GST obligations and to comply with the law.