18% GST leviable on Vada Pav, Lassi, Chaat sold at Counters located at Commercial Places with Accommodation exceeding Rs. 7500 per Day: AAR [Read Order]

The Kerala Authority for Advance Ruling ( AAR ) has ruled that counter sale of Pani Puri, Bhel Puri, Masala Puri and other chaat items like Masala Chat, Sev Puri, Samosa Chaat, Vada Pav, Pav Bhaji and Punjabi Lassi attract Goods and Services Tax ( GST ) at 18% when supplied at a place located at hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent.

The applicant is involved in the business of food products and the resale of bakery items. Additionally, the listed products are prepared on-site and offered to customers at a separate counter located in front of the shop, where they are consumed.

Get a Copy of Reverse Charge Mechanism under GST, Click here

The applicant sought an advance ruling on the following questions:

1. Whether Pani Puri, Masala Chat, Punjabi Lassi, Sev Puri, Samosa Chaat, Vada Pav, and Pav Bhaji, when cooked and sold under a brand name, are classified as restaurant sales taxable at 5%?

2. If deemed restaurant service, what is the applicable GST rate?

The applicant argued that the sale of these items through separate counters should be classified as restaurant services. These products are sold in a ready-to-eat condition and should therefore be taxed at 5% under both regular and composite registrations.

The Authority Bench observed, “7.3. To reach a conclusion, since the items listed above are goods, the first consideration is whether the supply constitutes goods or services.

Get a Copy of Reverse Charge Mechanism under GST, Click here

Clause 6(b) of Schedule II to the CGST Act, 2017, states that a composite supply, ‘by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment, or other valuable consideration,’ shall be considered a service.

Therefore, the AAR holds the view that the supply in question constitutes a service. Based on the details provided by the taxpayer, it was found that they engage in counter sales of the listed items in a ready-to-eat condition, which are consumed at the counter. It was also noted that the supplied items do not carry a brand name.

According to the Annexure to Notification No 11/2017-Central Tax (Rate) dated 28-06-2017, 'Services provided by restaurants, cafes, and similar eating facilities, including takeaway services, room services, and door delivery of food,' are classified under HSN 996331. Therefore, the most appropriate classification for the service of serving cooked items across the counter, as provided by the applicant, is HSN 996331.”

Get a Copy of Reverse Charge Mechanism under GST, Click here

The ruling further stated, “As per Notification No 11/2017-Central Tax (Rate) dated 28-06-2017, as amended by Notification No. 46/2017-Central Tax (Rate) dated 14-11-2017, the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or drink, where such supply or service is for cash, deferred payment, or other valuable consideration, provided by a restaurant, eating joint, including mess or canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied, other than those located in hotels, inns, guest houses, clubs, campsites, or other commercial places meant for residential or lodging purposes with a declared tariff of ₹7,500 or above per unit per day, is subject to a 5% GST rate, provided no ITC is claimed on goods and services used in providing the service.”

The tribunal bench, comprising Gayathri P.G. and Abdul Latheef K, concluded that “The sales mentioned above fall under ‘Services provided by restaurants, cafes, and similar eating facilities, including takeaway services, room services, and door delivery of food,’ classified under HSN 996331.” However, it was ruled that the rate of tax can be 18% if the applicant is located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates