The Gujarat Appellate Authority of Advance Ruling (AAAR) has ruled that GST is  payable on readily available food and beverages sold over restaurant’s counter and it does not qualify restaurant service.

The Gujarat Appellate Authority of Advance Ruling (AAAR) while rejecting the appeal observed that to fall within the ambit of restaurant service’, the pivotal factor is that the supply of food has to be a composite supply along with the supply of service. It goes without saying that sans supply of service, a supply of goods being food/beverages, fit for human consumption, is a case of pure supply of goods.

The appellant is in the restaurant business supplying foods which are prepared, cooked in the restaurant & also purchased from outside & sold over the counter in the restaurant premises. The activity of the appellant is of preparing food in the kitchen at the restaurant premises & serving the same to the customers who either consume it at the restaurant or at their place; that delivery of food is also dobe at the customers premises: that these activities get covered under restaurant services in terms of circular no. 164/20/2021-GST dated 6.10.2021.

In terms of agenda item 9 of the minutes of the 23rd GST Council meeting held on 10.11.2017, it was clarified that all stand-alone restaurants, whether air conditioned or otherwise, shall attract 5% GST without IIC: that food parcel/takeaway from restaurant shall also attract the same rate of GST.

The food & beverages prepared/cooked in the restaurant & supplied to customers either consumed or by way of takeaway, will qualify as restaurant services”, classifiable under SAC 9963.

The applicant is also engaged in purchasing food items from the market & supplying it from the restaurant over the counter, that these food items are not prepared/cooked in the restaurant but purchased from the local market & directly supplied to the customers; that the customers may either consume it at the restaurant or at their place.

The supply of already cooked/prepared food items purchased from the local market, by way of takeaway does not fall within the ambit of ‘restaurant service’ instead it is a supply of goods.

The applicant sought the advance ruling on the issue whether the food & beverages prepared & supplied by the Applicant to its customers whether consumed in the restaurant or by way of takeaway qualifies as restaurant services and is classifiable under SAC 996331. Services provided by restaurants, cafes and similar eating facilities including takeaway services, room services and door delivery of food leviable to GST 5% with no input tax credit.

Yet another issue raised was whether the readily available food and beverages (not prepared in the restaurant) sold over the counter by the Applicant to the customer whether consumed in the restaurant or by way of takeaway qualifies as ‘restaurant services’ classifiable under SAC 996331.

The AAR held that the food and beverages prepared and supplied by the Applicant to its customers whether consumed in the restaurant or by way of takeaway qualifies as restaurant services.

The AAAR upheld the AAR’s ruling and rejected the appeal filed by the restaurant.

Ruling Details

Applicant Name: Riddhi Enterprise

Date:  22/01/2025

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