Business Wire India
In the light of a recent incident concerning a guest being billed Rs.442/- for two bananas at a five-star hotel, the Federation of Hotel & Restaurant Associations of India (FHRAI) has clarified that the hotel has not done anything illegal. It also reiterated that charging 18 percent GST was a legal requirement incumbent upon the hotel.
“Chain hotels have presence across several cities and follow Standard Operating Procedures (SOPs). We need to understand that the hotel is not engaged in the sale and purchase of fruits and vegetables but it provides service of accommodation as well as restaurant service which include supply of food and beverages to its guests. Unlike a retail store where bananas can be purchased at market price, a hotel offers service, quality, plate, cutlery, accompaniment, sanitized fruit, ambience and luxury and not the commodity alone. A coffee available at ten rupees at a roadside stall could be served at Rs.250 in a luxury hotel,” says Mr Gurbaxish Singh Kohli, Vice President, FHRAI.
FHRAI also clarified that the hotel has done the right thing by charging 18 percent GST on F&B served in the hotel premises. GST laws are not optional, but are to be charged to the customer and passed on to the Government as per provisions of the law. It further stated that the rate for supply of services including goods by a restaurant is 9 percent CGST and 9 percent UT GST. It stated that the hotel has correctly charged the Goods & Service Tax (GST) on the bill which was legally payable by the customer.
“Food served within the premises of a hotel with a declared tariff for accommodation of Rs.7500/- per day and above is chargeable under Services Accounting Code 9963 at the rate of 9 percent CGST and 9 percent UT GST. So, while bananas, or other unpacked fruits, are outside purview of GST at a retail store, when served in a restaurant or hotel, whether as a fruit platter or a whole fruit, as per existing GST laws a levy of 18 percent is applicable. This is what the laws demand of us, and we don’t have a say in the matter,” says Mr Pradeep Shetty, Jt. Honorary Secretary, FHRAI.
However, the apex hospitality body has issued an advisory to its members on ways to handle such situations where a guest may have ordered eatables, including fruits from outside the menu.
“Our immediate concern is conflict resolution and for such a situation to not repeat. We do not wish for guests to experience a situation like this and are deliberating on possible measures that hotels could take. We will advise our members to sensitize the staff on the subject and will advise precautionary measures to avoid such happenings in the future,” concludes Mr. D V S Somaraju, Hon Treasurer, FHRAI.