Bakery Products Sold Without Preparation Are ‘Goods’, While Pizzas Prepared at Outlet Qualify as ‘Restaurant Service’: AAR

The Goa Authority for Advance Ruling (AAR) has held that pre-manufactured bakery products such as cakes, pastries, sandwiches, savouries, biscuits, bread, rusk, and slice cakes sold through bakery outlets without any cooking or preparation would qualify as a “supply of goods” under the GST regime. The Bench of Vishant S. N. Gaunekar, Additional Commissioner of SGST, Goa and Lakshmi Radhakrishnan, Joint Commissioner of CGST, Goa has observed that items such as pizzas, pastas, salads, shakes and similar food items prepared or blended at the outlet upon customer order would amount to “restaurant service.” The applicant had approached the AAR seeking clarity on the GST treatment applicable to different categories of food products supplied through its bakery outlets. Cremeux Bakeries stated that it manufactures bakery products at its Corlim factory in Goa and supplies them to multiple outlets, including outlets operated by franchisees. The applicant explained that out of its 13 retail outlets, around three were larger establishments where restaurant-style services were predominant, while the remaining were takeaway-oriented bakery stores with limited or no seating arrangements. The company sought advance ruling on three key issues. First, whether sale of bakery products manufactured at the factory and sold through outlets without any cooking or processing would constitute supply of goods. Second, whether preparation and sale of semi-finished items like pizzas at the outlets using bases and toppings supplied from the factory would amount to restaurant service. Third, whether the company could simultaneously charge GST as goods for pre-manufactured items and GST as services for prepared food items while maintaining separate accounting and billing systems. Buy Now: GST Judgments E-Compilation – April 2026 The applicant relied heavily on CBIC Circular No. 164/20/2021-GST dated October 6, 2021. It argued that ready-made bakery items sold without cooking or preparation retained the character of goods and therefore should attract GST applicable to goods based on HSN classification. However, items involving preparation, blending, heating or cooking at the outlet would assume the character of restaurant services. While examining the issue, the Authority referred to paragraph 3.3 and paragraph 4.2 of the CBIC circular. The circular clarifies that restaurant service includes takeaway and delivery services where cooking and supply of food is involved. It also specifically distinguishes ice cream parlours selling already manufactured ice cream from restaurants preparing food items. According to the circular, sale of pre-manufactured ice cream without cooking or preparation is supply of goods and not restaurant service. Applying the same principle to bakery products, the AAR observed that bakery products manufactured elsewhere and sold without any further processing at the outlet cannot be treated as restaurant service merely because they are sold from premises where restaurant activities are also carried out. The Authority held that such items would continue to be treated as “goods” and GST would apply according to the relevant HSN classification and applicable rate. However, the Authority drew a distinction for products such as pizzas, pastas, salads, shakes and similar items that are cooked, blended or prepared at the outlet after receiving customer orders. It observed that these activities involve cooking or preparation and therefore fall within the scope of “restaurant service” irrespective of whether the customer consumes the food at the premises or opts for takeaway. The AAR further held that GST law does not prohibit a taxpayer from simultaneously carrying out supply of goods and supply of restaurant services from the same premises. Therefore, the applicant was permitted to charge GST as goods for ready-made bakery products and GST as services for prepared food items, subject to maintenance of separate tax invoice series and proper accounting records. The Authority, however, cautioned that maintaining proper segregation between the two categories of supplies would be the responsibility of the taxpayer. It noted that compliance with GST provisions, especially regarding input tax credit reversals on common inputs and input services, could become a practical challenge. Ruling Details Applicant’s Name: Cremeux Bakeries Private Limited Citation: JURISHOUR-1164-AAR-2026(GOA) Ruling Date: 30/03/2026 Click Here To Read Ruling Read More: ITAT Refuses To Condone 9-Year Delay In Filing Appeal Despite Ongoing S. 153C Merits Litigation

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Bakery Products Sold Without Preparation Are ‘Goods’, While Pizzas Prepared at Outlet Qualify as ‘Restaurant Service’: AAR

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