GST on sweets, namkeens, cold drinks and other edible items through restaurant- GST AAAR Uttarakhand
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Case Details: |
Kundan Mishthan Bhandar |
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Appeal No.: |
Order No. UK/AAAR/04/2018-19 |
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Ruling pronounced by: |
GST AAAR Uttarakhand |
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Date of Ruling: |
27-02-2019 |
Brief Facts:
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The party had sought an advance ruling on:
(a) Sweetmeats, namkeens, Dhokla, etc. commonly known as snacks, cold drinks, ice creams, and other edible items; (b) Ready to eat items supplied from live counters such as jalebi, Chola bhatura and other edible items; (c) Takeaway orders of sweatmeats or namkeens by a person sitting in the restaurant of a sweetshop when such products are not consumed within the premises of the applicant but are takeaway. |
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On the above questions, the Advance Ruling Authority for Uttarakhand had rendered the following ruling:
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Aggrieved by the said order passed by the Authority for Advance Ruling, the party filed the instant appeal. |
Observations:
- The applicants are running sweetshop and restaurant in two distinctly marked separate parts of the same premises and are also maintaining separate accounts as well as separate billings for the two types of business.
- When the goods such as sweets, namkeens, cold drinks, and other edible items are supplied to customers in the restaurant or as takeaways from the restaurant counters which are being billed under restaurant sales head should fall under ‘composite supply’ with restaurant service being the principal supply since the supply of food in this case, is naturally bundled with the restaurant service. Therefore, the taxability of all such goods supplied to or through the restaurant will be governed by the principal service i.e. restaurant service and GST rate with applicable conditions will also be applicable to all such goods also. Input credit will not be allowed in this case.
- All goods which are supplied to customers through the sweetshop counter have no direct or indirect nexus with restaurant service. Anyone can come and purchase any item of any quantity from the counter without visiting the restaurant. The billings of such sales are also done separately. Thus, such sales, by no stretch of the imagination, can be clubbed with restaurant services. These sales are completely independent of restaurant activity and will continue even when the restaurant is closed, either temporarily or permanently. Hence, such sales will be treated as a supply of goods with applicable GST rates on the items sold. Input credit will be allowed on such a supply.
Ruling:
- The ruling no. 08/2018-19 as made by the Authority on Advance Rulings for the State of Uttarakhand is set aside.
- The sale of sweets, namkeens, cold drinks, and other edible items through restaurants will be treated as ‘composite supply’ with restaurant supply being the principal supply. Therefore, GST rates on restaurant services shall apply and no ITC will be allowed.
- Sale of sweets, namkeens, cold drinks, and other edible items from the sweetshop counter will be treated as supply of goods with applicable GST rates of the items being sold and input credit will be allowed on such supply.
- The applicant should maintain separate records for restaurant and sweetshop with respect to input and output and billings as well as other accounting records should also be separately maintained.
Disclaimer: The above article is based on the rulings made by AAAR Uttarakhand and is meant for educational purposes only. Readers are requested to act diligently and under consultation with any professional before applying the information contained in this article.
