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 attracts Goods and Services Tax ( GST ) at 5%, when sold without a brand name.
The applicant is in the business of food products and reselling bakery products. In addition, the above listed products are cooked at their premises and supplied through a separate counter in front of the shop to customers who consume at the counter.
Get a Copy of GST Ready Reckoner, Click here
The applicant sought advance ruling in respect of the following questions: –
1. Whether Pani Puri, Masala Chat, Punjabi Lassi, Sev Puri, Samosa Chaat, Vada Pav, Pav
Bhaji cooked and sold out a brand name falls under restaurant sales taxable @ 5% or not?
2. If it is restaurant service, what is the applicable rate of GST?
The applicant contended that the supplies of these items through separate counters qualify to be treated as restaurant services. The above listed products are sold in ready to eat condition and hence liable to be taxed at 5% for both regular and composite registration.
The Authority Bench noted that, “7.3. To come to a conclusion, since the items mentioned above are goods, the first point to decide is whether the supply constitutes supply of goods or services.
Get a Copy of GST Ready Reckoner, Click here
Clause 6 (b) of Schedule II to CGST Act, 2017, states that 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 supply of services.
Hence, the AAR expresses the opinion that the supply in question constitutes a service. From the details provided by the taxpayer, it was found that they are engaged in counter sales of the above listed items in ready to eat condition to customers who consume at the counter. It was also noted that the supplied items carry no brand name.
Get a Copy of GST Ready Reckoner, Click here
As per 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” falls under HSN 996331. We therefore find that the apt classification for the service of serving cooked items across the counter, which is provided by the applicant, is 996331.”
It was further added that, “As per Notification No 1 1/2017- Central Tax (Rate) dated 28-06-2017, as amended by notification No.46/2017-Central Tax(Rate) dated 14-11-2017, 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, 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 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 is 5%, provided no ITC is taken on goods and services used in supplying the service.”
Get a Copy of GST Ready Reckoner, Click here
The tribunal bench of Gayathri PG and Abdul Latheef K thus ruled that, “The sales as mentioned above falls under “Services provided by restaurants, cafes and similar eating facilities including takeaway services, room services and door delivery of food” falling under HSN 996331.”
However, it was ruled that the rate of tax can be 18% or 5% depending on the following conditions —
a- 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, the rate of GST shall be 18%.
b- If the above conditions are not applicable, the rate of CGST and SGST is 2.5% each only, provided that credit of input tax charged on goods and services used in supplying the service has not been taken.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
