Author: Khushi J Prajapati
The Kerala Authority of Advance Ruling (AAR) has ruled that the sale of items like chaat, lassi, and vada pav from a separate counter within a shop is categorized under ‘restaurant service’ thus making it liable to pay 5% GST.
The bench observed that Clause 6 (b) of Schedule II to CGST Act, 2017, states that Composite supply, “by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration” shall be supply of services.
Therefore, the authority opined that the supply in question constitutes a service. From the details provided by the taxpayer, it found that they are engaged in counter sales of the listed items in ready to eat condition to customers who consume at the counter.
It was also found that the supplied items carry no brand name and as per Annexure to Notification No 11/2017- Central Tax (Rate) dated 28- 06-2017, “Services provided by restaurants, cafes and similar eating facilities including takeaway services, room services and door delivery of food” falls under HSN 996331.
Therefore the bench found that the apt classification for the service of serving of cooked items across the counter, which is provided by the applicant, is 996331.
The Authority held that when ready meals like Pani Puri, Masala Chat, Punjabi Lassi, Sev Puri, and other snacks sold through an independent counter without any brand names at a bakery, are consumed there they fall under services provided by restaurants, cafés and similar places listed under HSN code 996331.
This ruling is based on sections 97 and 98 of the CGST Act 2017 and Notification No. 11/2017-Central Tax (Rate) with amendments that state GST rate of 5% is applicable only if such services are provided outside hotels, inns, guest houses, or other commercial accommodations having a declared tariff of ₹7,500 or more per room per night.
The bench ruled that for such service providers within these premises, GST rates are 18%. The order also refers to Schedule II Clause 6(b) CGST Act September 2017 which defines supply goods as part of that service, especially food and beverage provision.
Facts
The applicant in the case of Devalokam Bakery is seeking clarification on the applicable GST rates for ready-to-eat food items such as Pani Puri, Masala Chat, Punjabi Lassi, Sev Puri, Samosa Chat, Vada Pav and Pav Bhaji that are prepared and sold without a brand name at their bakery’s separate counter.
Customers consume them at the outlet itself. The applicant wanted to find out whether or not they fall under 5 percent GST as per restaurant services or if a different rate would apply according to service location and conditions. To clarify GST rates and HSN code classification of these food items, based on the provisions of CGST Act-related notifications, this application was made.
The applicant submitted that he is in the business of reselling bakery products. In addition, the listed products are cooked at their premises and supplied through a separate counter in front of the shop to customers who consume at the counter. Hence the supplies of these items through separate counter qualify to be treated as restaurant services. The listed products are sold in ready to cat condition and hence liable to be taxed @ 5% for both regular and composite registration.
Case Details
Case Name – Devalokam Bakery
Appeal No – Advance Ruling No KER/16/2024
Date of Judgement – 15/07/2024
Court’s Jurisdiction – Authority for Advance Ruling Kerala
Judges – Smt Gayathri P.G., IRS & Shri Abdul Latheef K
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