The Bengaluru Authority for Advance Ruling ( AAR ) has recently held that the supply of frozen foods attracts 18 per cent Goods and Service Tax.
The applicant SATS Food Solutions India Private Limited is engaged in the business of manufacture/production and supply of frozen foods in institutional packs to companies in Aviation Industries, quick service restaurants, Hotels etc. Also, this company is a 100% subsidiary of SATS Limited Singapore.
The applicant has sought an advance ruling on the applicability of GST on their products.
Before the Authority Sagar Dighe and M S Parul authorized representatives of the applicant submitted that they produce, manufacture and supply ready-to-eat and ready-to-cook foods in frozen form. Their supplies consist of semi-manufactured and fully manufactured frozen food items.
Further, the applicant contends that they supply the products in bulk industrial packs in buyer-to-buyer space to companies that will then sell to end consumers.
Hence since the applicant did not supply the products directly to end consumers over the counter also their activity is not restaurant service for charging a lower rate of tax.
Thus applicants viewed that services provided by them are not in the nature of restaurant service where the GST rate is 5% with no ITC.
While in discussion the authority observed that” the applicant is in to manufacture of ready to eat food which are processed food products that are pre-cleaned, pre-cooked, packaged, but not ready for consumption without thawing, heating, reapportioning and repacking. The applicant also manufactures ready-to-cook foods which are processed food products which need post-manufacturing preparations like thawing cooking and addition of vegetables and proteins at institutional buyers end”.
After considering the submissions, members of authorities consisting of authority M P Raviprasad and Kiran Reddy T ruled that “food products manufactured by the applicant are covered under tariff heading 2106 and hence eligible to GST at 18%.
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