The Bombay High Court has granted an interim stay in a case challenging the higher Goods and Services Tax (GST) rate of 18 per cent levied on restaurants operating within premium hotels, compared to 5 per cent for standalone restaurants, according to a report by The Economic Times.
The matter will be heard next on November 19. According to the report, the High Court has also issued notices to the Centre, the Maharashtra government, the GST Council, and other state authorities.
Industry-wide interest in case
According to the current guidelines, ‘restaurant services’ within ‘specified premises’ are to be taxed at 18 per cent, with Input Tax Credit (ITC), while others continue to be taxed at 5 per cent without ITC. The petitioner argued before the Aurangabad Bench that this distinction is “arbitrary, irrational, and commercially unjustified.”
What are specified premises?
Under the GST guidelines effective April 1, 2025, a hotel is considered a ‘specified premises’ if it charges more than ₹7,500 per room per night for even one room during the previous financial year. Such hotels will be treated as specified premises for the following year.
Hotels also have the option to voluntarily declare themselves as specified premises. Existing hotels can file the declaration between January 1 and March 31 of the preceding year, while new hotels can declare within 15 days of receiving GST registration.
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