The Authority for Advance Rulings (AAR), Maharashtra has held that the supply of an ice-cream Scoop would attract 18 per cent Goods and Services Tax (GST).
The applicant- Company, Arihant Enterprises, under a franchisee model, sold ice-creams in retail packs (party packs or tubs, typically of 500 grams) and also by way of ice-cream scoops. Sale of retail packs contributed 75% to the company’s turnover.
The company argued that even when it served scoops of ice-cream, the only activity was transfer of goods (ice-cream) to a cone or a cup. The service element involved was minimal. Only some of its outlets provided a few seats, but this was to benefit senior citizens and mothers accompanied by toddlers. Customers were free to eat the scoops outside the outlets.
The AAR held that even serving scoops of ice-cream did not contain any service element and was a supply of goods. It would attract GST at 18% and the applicant would be able to avail input tax credit (in simple terms it refers to credit that is available for taxes paid on its own purchases or expenditure).
The AAR observed that “the ice creams are sold in the same form as received by them and at agreed rates not exceeding the MRP and in most of the case, the said ice creams appear to be consumed outside the premises of the applicant. Even if we consider the said transaction as a composite supply as per Section 2(30) of the CGST Act we find that the principal supply in the subject case is a sale of goods i.e. ice creams, being the predominant element of the transaction.”
It was, therefore, held that there is a transfer of title in ice creams from the applicant to their customers and therefore as per entry no. 1(a) of the Schedule Il of the CGST Act, the subject transaction is nothing but a supply of goods.
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