Cooked-items sold as without brand name is a restaurant service.

08 Aug, 2024

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Background

Devalokam Bakery is a food product business registered under GST. They operate a counter where they sell cooked food items directly to customers for immediate consumption. The bakery sought clarification on whether these sales qualify as restaurant services and the applicable GST rate.

Issue and Contentions

Issue: Whether the sale of cooked food items (Pani Puri, Masala Chat, etc.) through a separate counter qualifies as a restaurant service and the applicable GST rate.
Applicant's Claim: The sales qualify as restaurant services and should be taxed at 5% under both regular and composite registration.

Key Points of the Ruling

Nature of Supply: The ruling clarifies that the supply of cooked food items by Devalokam Bakery constitutes a service and not a sale of goods. This is based on the definition of composite supply under the CGST Act.
HSN Code: The appropriate HSN code for these services is 996331, which covers services provided by restaurants, cafes, and similar eating facilities.
GST Rate:
- If the bakery is located within a hotel, inn, guest house, club, or similar establishment with a room tariff of Rs. 7,500 or more per day, the GST rate is 18%.
- If the bakery doesn't meet the above criteria, the GST rate is 5%, but the bakery cannot claim input tax credit (ITC) on purchases.