GST Project

on
Food & Beverage Services

Submission Date: 17-12-2021

Submitted To: Dr. Bhanu Sireesha

Submitted By: Group 2

Name Seat No Enrollment No

ASMEERA RAHMAN 15 21BSPHH01C0230

DEVANSHI SHARMA 53 21BSPHH01C0345

HARIKRISHNAN S NAIR 76 21BSPHH01C0443

JACOB KURIAN 28 21BSPHH01C0488

KAVETI HEMA SRI 71 21BSPHH01C0545

KRUTIKA KHADILKAR 39 21BSPHH01C0584

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 TABLE OF CONTENTS

S. No Topic Page No

1 Introduction 4

2 Food & Beverage Services 7

3 Pre- GST Regime in Sector 9

4 Post GST Regime in Sector 10

5 Impact/Issues of GST in Sector 12

6 Suggestion to solve issues of GST in Sector 14

7 Top Line & Bottom Line of Sector 14

8 Conclusion 25

9 Reference 26

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ACKNOWLEDGEMENT

It's our great pleasure and privilege to express our sincere gratitude to Professor " Dr.Bhanu Sireesha”
who has very kindly guided and supported us. We are grateful for her constant encouragement and
inspiration which very much helped us during the preparation of this GST on “Food & Beverage
Services”.

We would also like to extend our significant gratitude to “IBS Hyderabad” for expanding this
opportunity and giving each and every imperative resource required.

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INTRODUCTION

Taxes form one of the major sources of income for the government. The earning from tax is utilized
for the various public welfare and other projects by the government. The taxation system plays a
crucial role in the growth of a country's economy. Since the formation of the Indian Constitution, the
former In-direct taxation system has faced numerous criticisms mostly due to the imposition of
multiple taxes before the GST reform. The old multilayer taxation scheme imposed double taxation
along with a cascading effect which consequently led to an equal distribution of revenues between the
two-tier systems of government, based on the division of powers in India. The constitution has
provided us with a framework for the systematic way of imposition and collection of indirect taxes
but it is a fate to say whether the provisions are truly being utilized properly, or are applicable in the
present scenario. The Goods and Service Tax is designed in such a way to reform the earlier taxation
regime and to build an environment which can support both free and fair market competition. The
centre and the state in their unanimous decision tried to uplift the system of unified taxation system to
achieve their common goal and economic development.

Goods and Services Tax, known as GST is an indirect tax used in India on the supply of goods and
services. It is comprehensive, which means it has subsumed almost all the indirect taxes except a few
state taxes. Characterised as a multistage taxation system, the GST is imposed at every step in the
production process, however it is refunded to all parties in the various stages of production other than
the final consumer. Being a destination-based tax implies that it is collected from point of consumption
and not point of origin like previous taxes. GST, came into effect from 1 July 2017 through the
implementation of the One Hundred and First Amendment of the Constitution of India by the Indian
government. The tax rates, rules and regulations are governed by the GST Council which comprises
the finance ministers of the central government along with the states. The GST is formulated to replace
a slew of indirect taxes with a federated tax and is therefore expected to reshape the country's economy.

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Introduction to GST
New Article 366 (12A) of the Indian Constitution defined Goods and Services Tax (GST) to mean any
tax on supply of goods or services or both except taxes on the supply of alcoholic liquor for human
consumption. New Article 366(26A) defines service to mean anything other than goods. Existing
Article 366(12) defines goods to include all materials, commodities, and articles. As per the
government, the Goods and Services Tax (GST) is regarded as a „Reform‟ rather than amendment in
the existing Indian taxation system to sort out all backdoors and cons of the indirect taxation system.
India was one of the 123 countries in the world following the VAT taxation system. VAT was designed
and introduced on January 17, 2005 at the Centre and State levels by finance minister P. Chidambaram.
VAT replaced Central Excise Duty Taxation at the national level and Sales Tax System at the state
level, bringing major reform in the taxation system. Goods and Services Tax (GST) was proposed in
2014 to be implemented with effect from June 2016. The GST implementation is “dual” in nature -

5
one component is implemented by Centre (CGST) and another component by State (SGST). The base
of tax would be the same by Centre and State governments. GST came into effect in India on July 1,
2017. With some major modifications, the GST would now have three prime models :

(i) Central GST: GST to be levied by the Centre.

(ii) State GST: GST to be levied by the States.

(iii) Dual GST: GST to be levied by the Centre and the States concurrently.

GST thus forms a comprehensive and one tax system on manufacture, sale, and consumption of goods
and services at the national level. After the implementation of GST, all other taxes have been
discontinued. The presence of one tax at the national level, strictly under the control of the Central
Government has improvised collections of tax. It has led to a clear system and abolished tax based
theft and corruption at the national level. GST, being a friendly taxation system for the corporate sector
provides easier tax policies, reduces inflation, and makes the overall system more transparent.

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FOOD & BEVERAGES SERVICES

Food and beverage manufacturing is a large, diverse, and specialized industry. It's one of the oldest
industries in the world, but it's still full of innovation. From new products to low-cost, mass-produced
technologies, the industry is constantly looking for new ways to produce the food consumers want at
the best possible price.

The food and beverage industry includes all companies involved in the conversion of raw agricultural
products into consumer food products. The industry's overall supply chain includes food processing,
packaging and distribution. The food and beverage industry includes restaurants, cafeterias, cafes, fast
food restaurants, pubs, fine dining, food manufacturing operations, food service businesses, and
transportation services. food transfer, etc. This division includes fresh foods, packaged foods and
beverages (alcoholic and non-alcoholic). From groceries to ready-to-eat meals in restaurants,
organizations and events, the industry caters to a wide variety of retail outlets.

Packaging is often shift-work based in factories. Like other manufacturing work, it can involve
physical labour, as well as working with machinery. Working in food and beverage preparation can
include making coffee, juices, sandwiches, hot food, and more. Delivery work includes Meals on
Wheels (Community Support Connections), restaurant delivery, and truck transportation of food and
beverages in bulk. Serving work can be based behind a counter at a deli/café/fast food joint, or 'front
of house' at a restaurant.

The food and beverage industry in India constituted about 40 percent of its consumer-packaged goods
industry. The growth of the food and beverages industry is propelled mainly by developing countries
such as India, China etc., as the economies of these nations improve and more people are lifted into
the middle class.

Other sectors in Food and Beverage Industry are:

● Food retail - Not only in cities, modern food retail has grown in small towns, too. However,
nearly 70 percent of the business is in the unorganized sector.
● Online grocery supply - Online stores are able to offer attractive discounts and larger variety.
Increase in the number of Internet users is expected to boost prospects.

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● Food Service - The number of fine dining, casual dining, and quick service restaurants is
growing in cities. Younger professionals are their biggest customers. Home delivery and
takeaways are also gaining popularity.
● Dairy - Technology has come to the aid of the dairy sector, with ultra-high-temperature
processing, aseptic packaging, and membrane processing. The main challenges for the sector
are rising prices of fodder and lower milk yield of Indian cows and buffaloes.
● Cold Storage - India has a cold storage capacity of 30 million tons in 6,000 units, 90 percent
of them owned by private companies. The demand is expected to increase to over 45 million
tonnes. Lack of skilled manpower to handle food according to the norms is a major challenge.

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PRE-GST REGIME IN FOOD & BEVERAGE SERVICES

Goods and Services Tax is an indirect or consumption tax used in India on the amount of goods and
services. It is an all-inclusive, multistage, destination-based tax: comprehensive because it has
included almost all the indirect taxes except a few public taxes. Multi-staged as it is, the GST is
executed at every step in the manufacture process, but is intended to be refunded to all parties in the
various stages of manufacture other than the closing customer and as a destination-based tax,it is
collected from point of consumption and not point of origin like earlier taxes.

Goods and services are classified into 5 different tax blocks for collection of tax - 0%, 5%, 12%,18%
and 28%. Petroleum goods, alcoholic beverages, and electricity are not burdened under GST and
instead are taxed distinctly by the individual state governments, as per the previous tax system.

There is a superior rate of 0.25% on rough precious and semi-precious stones and 3% on gold. In
addition, a cess of 22% or other rates on top of 28% GST applies on a few items like fizzy snacks,
luxury cars and tobacco goods. Before GST, the legal tax rate for most things was about 26.5%,

After GST, most possessions are likely to be in the 18% tax slot.The tax came into significance from
1st July 2017 through the application of the One Hundred and First Amendment of the Constitution of
India by the Indian government. The GST replaced existing numerous taxes levied by the central and
state governments.

The tax rates, rules and regulations are governed by the GST Council which consists of the finance
ministers of the central government and all the cities and states. The GST is meant to standby a swing
of indirect taxes with a joint tax and is therefore expected to reshape the country's 2.4 trillion-dollar
budget, but its implementation has received criticism. Positive outcomes of the GST include the travel
time in interstate movement, which fell by 20%, because of termination of interstate check posts.

GST or Goods and Services Tax substituted a slew of central and state taxes from July 1. For the
month of July, firms are required to file basic, self-assessed GST returns by August 20. They will have
to file complete returns in early September that itemize and reunite every single sales invoice. Amongst
all these, the Central Board of Excise and Customs has once again noted some common use substances
- and their pre-GST tax rates - where the tax incidence is lower or equal ever since GST came into

9
effect. It has declared numerous "items of common use" comparing GST rates with the earlier indirect
taxes.

"Before GST tax incidence would be upper if the tax occurrence on account of Central Sales Tax,
octree, entry tax etc. (which is more than 2%) is also included," said the part of the revenue department
under the finance ministry.

POST- GST REGIME IN FOOD & BEVERAGE SERVICES

Goods and Services Tax on food services in India varies from 5%, 12% or 18%, which depends on a
variety of factors and is not limited to type of establishment and location of food service provider. The
execution of GST on food services replaced the prior VAT and service tax system, however the service
charge which is carried out by cafés is isolated from GST. It is prominent that alcohol actually draws
in VAT, which is a state level expense, accordingly cafés serving both food and alcohol will include
separate assessments with GST being material to food and nonalcoholic beverages while VAT will be
charged on alcohol served. Aside from food administrations, GST on food is additionally relevant for
purchases by a common man which at present component rates going from 0% to 18% GST.With GST
execution on first July 2017, all available organizations under GST are needed to acquire GST
enrollment and begin documenting GST returns. In this report, let us check out the GST rate for a wide
range of Food and Beverage administrations and its arrangements in the GST situation all through the
whole production network.

Description Applicable GST Rate

Food services provided by restaurants including 5% with No ITC
takeaway facility (both air-conditioned and non a/c)

Any food/drink served at cafeteria/canteen/mess 5% with No ITC

operating on a contract basis in the office, industrial
unit, or by any school, college, etc on basis of a
contractual agreement which is not event-based or
occasional

Services provided by restaurants within a hotel with 5% with No ITC

room tariff less than Rs. 7,500

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Services provided by restaurants within a hotel with 18%
room tariff of Rs. 7,500 or more

Meals/food services provided by Indian Railways/IRCTC 5% with No ITC

or their licensees both in trains or at platforms
Food services provided in a premise arranged for 18%
organizing function along with renting of such premises
Food services provided at exhibition, events, conferences, 18%
outdoor & indoor functions that are event-based or
occasional in nature

Other Accommodation, food and beverage services 18%

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IMPACT/ISSUES OF GST ON FOOD & BEVERAGE SERVICES

In Supply of Goods or services

The Indian Constitution still gives a provision for the imposition of tax on the sale or purchase of
commodities on certain activities, however Schedule II of the CGST Act defines such activity as the
providing of services. Some experts believe that the article in the Constitution has been repealed by
implication because of the omission of entry 54 in the Constitution, which now gives the State
Government the power to levy tax only on the specified goods; however, the veracity of such a view
is debatable because it is common law that entries in the Constitution's Seventh Schedule do not limit
the power of parliament/state legislature.

The question of whether Schedule II is unlawful or not will be decided only by the Supreme Court,
not before. The Supreme Court issue involving the levy of service tax on restaurant services may have
repercussions under GST as well, if the Court rules that the service tax valuation mechanism is
unconstitutional.

A Simplified bill

Those dining out at restaurants have noticed a simplification of bills since GST replaced a slew of
levies and cess, including VAT, Service Tax, and the Krishi Kalyan cess, to mention a few. Customers
noticed a fall in the effective tax on restaurant bills after the adoption of GST on food. However, the
reduction in the expense of eating out for clients was just minimal at best. Furthermore, the GST has
not altered the restaurant's service charge, which is still charged by the consumer in addition to the
GST on food

No ITC for restaurant owners

The availability of input tax credit (ITC) with the implementation of GST was projected to boost
restaurant operators' operating capital available. Later revisions lowered the benefit of the ITC for
restaurant operators. However, under current GST laws, this ITC benefit is only available to companies

12
that charge 18 percent GST, while restaurants and diners that charge 5% GST on food services are not
eligible for ITC benefits.

Bigger restaurant chain – bigger problem of ITC attribution

The distribution of ITC between eligible and ineligible credit becomes extremely complicated in the
case of large chains that manufacture such things for serving in their restaurants rather than for sale as
packaged food. One must comprehend the relationship and distinction between Rule 6 of the CCR and
Rules 42/43 of the CGST Rules, as well as the manner in which rules must be applied under GST (i.e.
whether rules must be applied at the store level, registration level, or item level). Furthermore, the
assessee may not be able to opt out of Rule 42/43's mandate if the legislator has mandated that it be
administered in a specific way. It's possible that their own reasoning and convenience may be rejected.

Composition Scheme – really required for a restaurant?

Supplier providing restaurant service have the right to choose a configuration scheme. However, after
changing to 5% without ITC, there is no benefit to continuing the configuration scheme as customers
may not be able to refund taxes. Some restaurants in the industry are still continuing their composition
schemes, making their businesses less competitive.

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SUGGESTIONS TO SOLVE THE ISSUE OF GST IN THE SECTOR

● Considering that the restaurants are not entitled to claim ITC and in order to avoid the
compliance burden on such non-ITC sector, it is suggested to do away the requirement of TCS
deduction.
● One needs to consider various factors i.e., nature of infrastructure and facilities offered,
compulsory or optional self- services, take away or dining, home delivery, prepackaged items
or in-house manufactured, billing system, segregation of various supplies through various
modes. Decision as to nature of supply to be taken after evaluating impact
● Some of the restaurants in the industry are still continuing with the composition scheme
making their business less competitive. Perhaps, it is time to discontinue the composition
scheme for the restaurant sector to reduce the confusion in industry.
● There is need for Government to relook at the decision of disallowing ITC with 5% rate of tax
as it is clearly contrary to principles of tax on value addition
● Considering that ITC may not be admissible, it becomes imperative for the sector to
consciously look at cost to optimize the cost. Possible areas which could be looked at may be
lease arrangement with returnable deposit, branded disposal material at concessional rates by
brand owner, job work model, outdoor catering through joint execution or so on. The planning
should be within four corner of law to ensure that it does not partake the tax evasion

Top line & Bottom line of the Sector

Top line generally refers to the gross sales of the sector while Bottom Line refers to the net income of
the company. Both the top-line and bottom-line figures are useful in determining the financial strength
of a company. In the food and beverage sector. Within the food and beverage sector, higher profit
margins certainly make beverage companies look like better investments than food processing firms.
The total of organized Indian Food and Beverage industry is expected to be Rs. 400000 Crores as on
2019 and its revenue in the industry is expected to show a annual growth rate of 14.2%

Food and beverage sector is one of the fastest growing businesses in India and it represents a good
investment option as it is not much affected by the small market fluctuations. GST was really helpful

14
for the organized traders as raw materials could be bought from a single market in any part of the
country as the tax will be the same throughout the country. GST on restaurants will surely be more
convenient as they could get the raw material at cheaper rates and the final bill is also only inclusive
of the GST, thus making it more convenient and profitable for them.

No changes have been made to the services sector thus the customers are liable to pay the service
charges along with the GST. Though Input tax credit was expected by the ones in the sector, under the
provision of GST rules ITC benefit is only available to those charging above 18% GST. At present
GST on the food items and food services do not exceed 18%and thus no major price change has been
observed after the implementation of GST on food items.

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Companies of Food & Beverage Sector

MCDONALD’S INDIA PVT LTD.:

McDonald’s India Private Limited is an unlisted private company incorporated on 30 August, 1993.
The company is a chain of quick service restaurants, serving millions of customers everyday.
McDonald’s is the world's largest restaurant chain by revenue, serving over 69 million customers daily
in over 100 countries across 37,855 outlets. It is classified as a private limited company.

The place of supply for McDonalds India is the place of principal business, and as per GST records
the locations are:

● Puducherry Chhattisgarh
● Madhya PRadesh Telangana
● Goa Kerala
● Andhra Pradesh. Maharashtra
● Karnataka Gujarat

Products & Services offered by the company are Burgers, Rolls, French Fries, Cakes It's authorized
share capital is INR 1,000.00 cr and the total paid-up capital is INR 468.46 cr..Mcdonalds India comes
under the Regular Registration type in GST. The taxpayers who are registered under the regular
scheme has to file their returns on monthly basis. The company’s import export trade sector contributes
significantly to the overall GDP percentage of India. Under imports, the company has registered under
9 HS Codes & for Export in 4HS codes which the category of items varies from plastics, electronics,
machinery, oven etc.In the Export company uses 4 HS codes. McDonalds cannot opt for Composition
scheme as the threshold value is less than 1.5crore.

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SUBWAY SYSTEM INDIA PVT LTD.:

Subway is a multinational fast food restaurant chain based in the United States. Its business name in
India is Subway Systems India pvt ltd. incorporated on 10th September 2002. It is involved in the
supply of submarine sandwiches or subs, wraps, salads, baked goods (cookies, muffins and doughnuts)
and also sells lays, cold drinks, Nescafe coffee, brownie and packaged cold drinks. Its authorized share
capital is INR 5.00 lac and the total paid-up capital is INR 5.00 lac. It is an unlisted private limited
company.

Subway was registered under GST on 01/07/2017. It is registered in 15 states. The place of supply /
place of principal business of subway are: -

● Maharashtra
● Delhi
● Telangana
● Haryana
● Kerala
● Karnataka
● Rajasthan
● Chhattisgarh
● West Bengal
● Odisha
● Punjab
● Tamil Nadu
● Uttar Pradesh
● Chandigarh
● Jammu & Kashmir.

The status of GST registration of Subway in India is Active status for all 15 states and the type of
registration is Regular registration that means business whose turnover exceeds Rs 40 lakhs.

Subway charges 5% GST i.e. 2.5% SGST and 2.5% CGST on its products.

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DOMINO’S PIZZA:

Domino's Pizza, Inc. is an American multinational pizza restaurant chain founded in 1960, is the
recognized world leader in pizza delivery operating a network of company-owned and franchise-
owned stores in the United States and international markets.

Jubilant FoodWorks Limited is an Indian food service company based in Noida, Uttar Pradesh which
holds the master franchise for Domino's Pizza in India, in 1996, the first Domino’s Pizza store was
opened in New Delhi, India became Domino's second-largest market in December 2014, behind the
United States surpassing United Kingdom. Domino's Pizza operates 1,325 stores in 282 Indian cities
as on 31 December 2019.

Domino’s is involved in the supply of products like pizzas, chicken, sandwiches, pastries, bread oven
baked dips, desserts, salads, drinks etc. And services like Home Delivery within 30 mins

The place of supply for domino’s pizza is the place of principal business that is

● Gujarat Rajasthan Meghalaya

● Maharashtra Punjab assam
● Uttar Pradesh Haryana Arunachal Pradesh
● West Bengal Tamil Nadu Nagaland

● Madhya Pradesh Delhi Sikkim

● Karnataka Jammu & Kashmir goa
● Chhattisgarh Uttarakhand Bihar
● Chandigarh Odisha Kerala
● Puducherry Dadra & Nagar haveli Daman and Diu
● Andhra Pradesh Jharkhand Himachal Pradesh

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The status of GST registration of Domino’s pizza in India is Active status for all above mentioned
places, it has 30 places of registrations and the type of registration is Regular registration that means
business whose turnover exceeds Rs 40 lakhs.

Domino’s is not eligible for composite scheme/cess, as its turnover is more than 1.5crs

Domino’s is eligible to claim Input Tax Credit of 5% on common credit, GST rate on restaurants was
cut to 5% without ITC from 18% with ITC

Domino’s is involved in the Restaurant supply chain, the applicable GST for the Restaurant chain is
18% on its products supplied.

Domino’s Supply chain is divided into three main tiers. Tier2 comprises Domino’s key suppliers that
ship ingredients to Domino’s distribution centers. Tier 2 includes nine Leprino’s foods cheese
suppliers, three Paradise tomato sauce suppliers, thirty-eight Ardent Mills flour suppliers and two
Domino’s thin crust bread and veggie supplier centers. Tire 2 supplies pizza ingredients cheese, tomato
sauce, flour, thin crust bread to tier1 (Domino’s Distribution centers). Tier1 comprises 16 Domino’s
distribution centers that supply all ingredients to each of the stores in the US. Tier1 supplies the pizza
ingredients to Tier 0 (5098 Domino’s stores). Tier 0 takes these ingredients and produces pizza to each
of Domino’s customers.

Compliances Issue:

Domino's Pizza fined for not passing GST rate cut benefits to customers.

The National Anti-Profiteering Authority has directed Jubilant FoodWorks, the operator of the
Domino's Pizza chain in India, to deposit the illegal gains worth Rs 41.42 crore with the government

The chain has been found guilty of not passing on GST tax cut benefit to its consumers during the
period November 15, 2017, to May 31, 2018, and the company has been directed to deposit the illegal
gains worth Rs 41.42 crore with the government. The authority has also asked it to reduce prices of its
products by way of commensurate reduction in taxes.

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In the case of Jubilant FoodWorks, the NAA passed the order on an email complaint filed by a
customer that Domino's had not reduced the prices of its Stuffed Garlic Bread and Medium Veg Pizza
despite the GST rate cut.

BURGER KING:

Burger King is an American multinational chain of hamburger fast food restaurants. Headquartered in
Miami-Dade County, Florida the company was founded in 1953 as Insta-Burger King. Burger King's
menu has expanded from a basic offering of burgers, French fries, sodas, and milkshakes to a larger
and more diverse set of products. In 1957, the "Whopper" became the first major addition to the menu,
and it has become Burger King's signature product since.

Burger King is a Public Limited Company. This business was registered under GST on 2017-07-01.
The company operates in 265 outlets across 19 Indian cities. Since the introduction of GST Taxes has
been reduced on the food bill thereby causing the food bill to reduce by approximately 9.5% and this
factor played a vital role in attracting more customers to their outlets. During the financial year, Burger
King India's net loss stood at Rs 173.91 crore in FY21 compared with net loss of Rs 76.57 crore in
FY20. Net sales fell to around 41.22% to Rs 494.45 crore in FY21 over FY20.

TATA STARBUCKS PRIVATE LIMITED:

Tata Starbucks Private Limited, formerly known as Tata Starbucks Limited, is a joint venture between
Tata Consumer Products and Starbucks Corporation that owns and operates Starbucks stores in India.
The outlets are branded Starbucks "A Tata Alliance". A multinational chain of coffeehouses and
roasteries operated by American companies, it is the largest chain of coffeehouses in the world. It is
classified as a non-govt company and is registered at RoC-Mumbai. Their state of registration is
Maharashtra. Its authorized share capital is INR 10 billion and the total paid-up capital is INR 8 billion.
This business was registered under GST on 01/07/2017 and registration type is regular. Total no. of
registration as a private company is 1 and it operates 233 outlets across 19 Indian cities. Company
time of supply/place of supply is as per the customer need and location. The tax rate levied by the
company is 5% at present. The company was recently fined for not passing on GST cut benefits since
they were lowered to 5% without the benefit of credit, which was previously 18% with input tax credit

20
(ITC). Therefore, the price of the coffee remained the same even though GST was drastically reduced,
ensuring that Starbucks didn't suffer any losses. After an investigation, Starbucks was exposed to its
fraud. Starbucks is an Indian Importer / Buyer Of steel and deals in majorly hs code 94031010,
94031090, 940320, 94032010, 94032090. Major trading partners of Starbucks are China, US, Taiwan,
Province of China, UK, Singapore. The company has a vertically integrated supply chain, which
means it is involved in every step of the process, from the coffee bean to the cup of coffee sold to
customers.

KFC:

KFC (also known as Kentucky Fried Chicken) is an American fast food restaurant chain headquartered
in Louisville, Kentucky that specializes in fried chicken. It is the world's second-largest restaurant
chain (as measured by sales) after McDonald's, with 22,621 locations globally in 150 countries as of
December 2019. The chain is a subsidiary of Yum! Brands, a restaurant company that also owns the
Pizza Hut, Taco Bell and WingStreet chains.

KFC was one of the first American fast-food chains to expand internationally, opening outlets in
Canada, the United Kingdom, Mexico and Jamaica by the mid-1960s. Throughout the 1970s and
1980s, it experienced mixed fortunes domestically, as it went through a series of changes in corporate
ownership with little or no experience in the restaurant business. In the early 1970s, KFC was sold to
the spirits distributor Heublein, which was taken over by the R. J. Reynolds food and tobacco
conglomerate; that company sold the chain to PepsiCo. The chain continued to expand overseas,
however, and in 1987 it became the first Western restaurant chain to open in China.

Registration of GST:

The registration of KFC is the place of principal business that is

● Gujarat Rajasthan Meghalaya

● Maharashtra Punjab assam
● Uttar Pradesh Haryana Arunachal Pradesh
● West Bengal Tamil Nadu Nagaland

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 ● Madhya Pradesh Delhi Sikkim
● Karnataka Jammu & Kashmir goa
● Chhattisgarh Uttarakhand Bihar
● Chandigarh Odisha Kerala
● Puducherry Dadra & Nagar haveli Daman and Diu
● Andhra Pradesh Jharkhand Himachal Pradesh

The status of GST registration of KFC in India is Active status for all above mentioned places, it has
30 places of registrations and the type of registration is Regular registration that means business whose
turnover exceeds Rs 40 lakhs.

KFC is not eligible for composite scheme/cess, as its turnover is more than 1.5crs

KFC is eligible to claim Input Tax Credit of 5% on common credit, GST rate on restaurants was cut
to 5% without ITC from 18% with ITC

KFC is involved in the Restaurant supply chain; the applicable GST for the Restaurant chain is 18%
on its products supplied.

Place of supply of goods of KFC:

There are different conditions for different transactions to major place of supply of good under GST
Act (section 10 of IGST Act)

• SEC (1) (a)when the exchanges/supply includes development of products, at that point spot of supply
will be Where development of merchandise ends for conveyance of beneficiary. For instance -KFC of
Punjab supplies products to KFC of Delhi then POS is Delhi.

• SEC 10(1)(b) Bill-to-Ship-to Transaction: – When products are conveyed by provider to beneficiary
or some other individual on bearing of third individual, regardless of whether going about as a
specialist or something else, at that point of supply Principal Place of Business of Such Third

22
individual. For instance, If Mr. X of Haryana gives coupon of KFC to Mr. Y and Mr. Y eats in KFC
in Delhi, the POS is Haryana (Mr. X's Location)

• SEC 10(1)(c) Where supply doesn't include development of products. (Thumb rule), then the
inventory Location of such merchandise at the hour of conveyance of the beneficiary. For instance, If
Kailash purchases food at Kashi, at that point POS for such pre-ordered food is that restaurant.

• SEC 10(1)(d) Where products are amassed or introduced at site, Then the inventory Place of Such
establishment or gathering happens. For instance, Zenia of Maharashtra offered an agreement to
Zeeshan of Andhra Pradesh to introduce the franchise of KFC in Kerala; at that point POS was in
Kerala.

• SEC 10(1)(e) Where the merchandise are provided on Board a transport including vessel, airplane,
train or engine vehicle, Then the spot of supply Location where such products are accepted. For
instance, Amitabh orders food in Assam-Gujrat train to sell them in train venture, at that point POS is
Assam where products are accepted and not the spots where he really sold them

• SEC10(2) Where POS of merchandise can't be resolved, at that point the spot of supply POS will be
resolved in a way as might be recommended.

Time of Supply based on KFC:

One of the retail outlets, from which KFC and other food items are made, sales take place is KFC.

So, as a matter of fact, the supply of food and beverages to other outlets of KFC involves some amount
of GST to be paid. To understand the application of the GST, let us consider a supply of KFC products
from Bangalore, Karnataka to Mumbai, Maharashtra.

First of all, since it is an intrastate transaction, so SGST and CGST, both will be charged in the invoice.

Now suppose the outlet at Bangalore, generated the invoice the moment the order was placed from the
KFC retailer, let the date be 15th October 2020, and the products were delivered on 16th October 2020.
Since, the earlier of the two dates is 15th October, so the SGST and CGST applicable here will be of
the State of Karnataka, since the invoice was generated in that state. Had the invoice been generated

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at the time of delivery, then the tax rate would have been that of the state of Maharashtra, as the invoice
had been generated there.

Also, had it been the case that KFC made an advanced payment and promised to pay the rest on the
delivery of the goods, then in that case there would be no GST applicable on the payment made in
advance.

The GST in advance is payable only at the time of generation of the invoice.

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CONCLUSION

The Food and Beverage sector was burdened with a number of taxes at each and every point- right
from the acquisition of the raw materials to the sales of finished items. Multiple taxes, in turn, charged
from the customers at the final bill may be a big turnoff for the customers and plays a significant role
in turning them away. With the emerging changes in tax layout, the GST will impact primarily the
promotional strategy of restaurants and food service businesses and will give consumers’ clear picture
of taxes they pay in restaurants. A subsuming single tax slab will create a standardized price and will
benefit consumers directly by providing law and easy to read bills whenever they dine out. Reduction
in tax will increase consumption which will create more employment opportunities boosting the make
in India initiative. A decrease in the effective tax on restaurant bills was also evident to customers after
GST implementation. But the decrease in the cost encourages the people to visit restaurants more often
. However, the service charge has not been affected by GST and is still applied by the restaurants.GST
on food service or restaurants has been seen as a win-win situation from both the end whether it is
customer or owner. The impact of GST on food services and restaurants has proved to be a good
initiation by the government.

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REFERENCES

● https://www.moneycontrol.com/news/business/companies/mcdonalds-has-includ ed-
gst-in-its-prices-says-westlife-development-2320585.html

● https://www.paisabazaar.com/tax/gst-on-food/

● https://economictimes.indiatimes.com/industry/services/hotels-/-
restaurants/mcdonalds-india-franchisee-drags-government-to-court-over-gst-
credit/articleshow/72110767.cms?from=mdr

● https://cleartax.in/s/gst-composition-scheme-restaurants

● https://www.mastersindia.co/gst-search/?name=JUBILANT-FOODWORKS-LIMI
TED gstin=02AABCD1821C2ZM

● https://economictimes.indiatimes.com/industry/cons-products/food/jubilant-found-
guilty-of-not-passing-rs-41-42-crore-gst-benefit-on-sale-of-domino

● https://www.jubilantfoodworks.com/brands/dominos-pizza

● https://limetray.com/blog/input-tax-credit-and-what-that-means-for-your-restaurant/

● https://www.mastersindia.co/gst-search/?name=subway-systems-india-private-
limited&gstin=07AAGCS5808M1ZX

● https://www.zaubacorp.com/company/SUBWAY-SYSTEMS-INDIA-PRIVATE-
LIMITED/U55101HR2002PTC084409

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