The Chhattisgarh bench of the Authority of Advance Ruling ( AAR ) has recently ruled that, Supply and sale of sweets, namkeens, cold drinks and other edible items through restaurant by the applicant attracts GST at 5% [2.5% CGST + 2 5% SGST], on restaurant service and will also be applicable on all such sales from restaurants and that no input tax credit would be available.
M/s Gangaur Sweets had filed an application seeking advance ruling as to whether its activity of supply of pure food items from sweetshop who is also running a restaurant is a transaction of supply of goods or a supply of service, on the nature and rate of tax applicable on the consumable items supplied from ground floor of sweetshop/restaurant and regarding entitlement of benefit of input tax credit with respect to the above supplies.
The applicant contended that as per the prevailing market strategy today it can be noticed that very often, two or more goods or a combination of goods and services are supplied together, because of the following reasons.
On behalf of the applicant, Abhay Kumar Tiwari contended that the supply can be treated as composite supply. It was further submitted that, sale of sweets, namkeens, cold drinks & other edible items from sweet shop counters can be treated as supply of goods with applicable GST rates of the items being sold & input credit can be allowed on such supply.
Differentiating the nature of supply from principal, composite and mixed, the Authority ruled in light of the Notification No. 11/2017 – Central Rate (Tax) dated 28.06.2017, that the rate of GST on aforesaid activity shall be 5% as on date.
As regard to the issue of admissibility of ITC credit, the AAR bench of Members Sonal K Mishra and Rajesh Kumar Singh observed that the applicant cannot avail credit on the GST paid on the goods and services used in their said activity in terms of aforesaid notification.
It was also clarified that composition tax was not to be collected by the Restaurant from the recipients of supplies.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
