The Gujarat Authority for Advance Ruling ( AAR ) has held that the lower rate of 5% GST applicable to the food items “prepared and cooked” in the restaurant alone whereas, the sale of readily available food items would attract the applicable rates.
M/s Riddhi Enterprise, the applicant, is in the restaurant business which offers a variety of food items including food and beverages prepared at the restaurant as well readily purchased food and beverage sold over the counter.
The applicant is engaged in the restaurant business and supplying foods which is prepared and cooked in the restaurant and also supplying the foods purchased from the outside and sold over the counter in the restaurant premises. The main point here is to decide the Tax Rate of GST on both types of supply which are happened from the restaurant.
The staff of the restaurant is commonly handling the orders for food and beverages to be prepared in the restaurant kitchen as well as the readily available food/beverages sold over the counter irrespective of whether they are consumed in the restaurant premises or as a takeaway. The display of food/beverage items is also common for service by any of the methods. The applicant sought for a ruling with regard to their tax liability under the GST regime in respect of the services provided by them.
The readily available over-the-counter products the customers may choose to consume them in the restaurant, or they may choose to take away and consume them elsewhere. It is worth noting that the element of service i.e. the customers using the restaurant infrastructure to consume the readily available over-thecounter products is included in the pricing of such products irrespective of whether the customer chooses to consume the product within the restaurant premises or takes it away for consumption elsewhere.
State Member Mr. Milind Kavatkar and Central Member Mr. Amit Kumar Mishra held that restaurant service is leviable tax rate of GST @ 5% (2.5% CGST +2.5oh SGST) with no input tax credit as per Sr. No. 7(ii) of Notification No.lll20l7 – Central Tax (Rate) dated June 28, 2017, read with Sr. No. 7(ii) of Notification No.11/2017 – State Tax (Rate) dated June 30, 2017.
Regarding tax rate applicable to the food items from market and supply from the same premises over the counter, the AAR held that “these food items are not prepared/cooked in the restaurant but purchased from the local market and directly supply to the customer in same premises. The customer may consume these food items at the restaurant or take away at their place.”
Accordingly, it was held that “the readily available food items (not prepared/cooked in the restaurant) sold over the counter by the Applicant to the customer whether consumed in the restaurant or by way of takeaway does not qualify as ‘restaurant services’ instead of falls under supply of goods which is liable to applicable rate of GST Tax.”
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