Rate and principal activity for adventure park.

Determining the correct GST treatment for an adventure park that provides both activities and food for a single price depends on whether the transaction is considered a composite supply or a mixed supply.

1. Composite Supply vs. Mixed Supply

• Composite Supply (Section 2(30) of the CGST Act): This applies if the services are "naturally bundled" and supplied in the ordinary course of business, with one service being the principal supply. If you are providing a day-package where the adventure activities are the main purpose and the meals are incidental or naturally provided as part of that experience, it can be argued as a composite supply. In this case, the entire bundle is taxed at the rate of the principal supply (typically 18% for amusement/adventure park admission).

• Mixed Supply (Section 2(74) of the CGST Act): If the activities and food are viewed as independent supplies that are bundled for a single price but not naturally dependent on each other, they may be classified as a mixed supply. Under GST law, a mixed supply is taxed at the highest rate applicable to any of the individual components in the bundle.

2. Industry Practice and Precedents

• Nature of Business: Adventure parks typically view the admission ticket as the principal supply. The food is often provided as part of a package to enhance the experience.

• Risk Mitigation: Tax authorities often scrutinize bundles. To minimize risk, many businesses itemize their invoices. If you break down the price into "Admission to Adventure Park" and "Restaurant/Food Services," you can apply the respective tax rates (e.g., 18% for the park entry and the relevant rate for food) to each component.

• Legal Precedents: You may wish to consult with a tax professional regarding your specific business model. As noted in various Advance Rulings, the classification often hinges on whether the services can be provided independently. If a customer can buy a ticket without the meal, it supports the argument that they are separate services.

Recommendation

• Itemized Billing: The safest approach is to show a break-up of the ticket price on the invoice, clearly identifying the charges for "Admission to Adventure Park" and "Food/Catering Services." This avoids the "mixed supply" trap of charging the highest tax rate on the entire amount.

• Professional Consultation: Because tax rulings can be specific to the facts of a business (e.g., whether the food is prepared on-site, whether it's mandatory, or optional), it is highly recommended to have a local chartered accountant review your specific invoice structure to ensure compliance.

Summary:

Whether your bundle is a "composite supply" (taxed at the principal rate, usually 18%) or a "mixed supply" (taxed at the highest rate of any component) depends on whether the services are naturally bundled. To mitigate tax risks, it is standard practice to provide an itemized invoice splitting the charges for park entry and food, allowing you to apply the appropriate tax rates to each service.

Will GST On Amusement Parks Hike Up Entry Prices?

This video is relevant as it provides a concise explanation of GST applicability and the tax rate for amusement/adventure park admissions.