Pre-manufactured Food Items Taxable as 'Goods', In-store Preparation is 'Restaurant Service: AAR Allows Dual Tax Treatment for Bakery Chain [Read Order]
The AAR ruled that the Applicant is permitted to charge GST as goods for pre-manufactured items and as services for prepared items.
![Pre-manufactured Food Items Taxable as Goods, In-store Preparation is Restaurant Service: AAR Allows Dual Tax Treatment for Bakery Chain [Read Order]](https://images.taxscan.in/h-upload/2026/05/20/2137518-pre-manufactured-food-items-taxable-goods-ins-store-preparation-resturant-service-aar-dual-tax-treatment-bakery-chain-taxscan.webp "Pre-manufactured Food Items Taxable as Goods, In-store Preparation is Restaurant Service: AAR Allows Dual Tax Treatment for Bakery Chain [Read Order]")
The Goa Authority for Advance Ruling (AAR) ruled that a bakery chain can adopt dual tax treatment at its outlets, taxing pre-manufactured food items as "goods" while taxing food prepared on-site as "restaurant service." M/s Cremeux Bakeries Private Limited, the Applicant, sought clarification on whether their business activities constituted a supply of goods or services. The...
The Goa Authority for Advance Ruling (AAR) ruled that a bakery chain can adopt dual tax treatment at its outlets, taxing pre-manufactured food items as "goods" while taxing food prepared on-site as "restaurant service."
M/s Cremeux Bakeries Private Limited, the Applicant, sought clarification on whether their business activities constituted a supply of goods or services. The Applicant operates a factory in Corlim supplying 13 retail outlets, selling both ready-made bakery items and prepared foods like pizzas.
The Applicant contended that pre-manufactured items sold without further processing should be treated as goods, citing CBIC Circular No. 164/20/2021. They argued that items like pizzas, which involve cooking and preparation at the outlet upon order, should be classified as restaurant services.
The Bench of Vishant S. N. Gaunekar and Lakshmi Radhakrishnan examined the nature of the supplies. The Authority observed that items manufactured at the factory and sold without any cooking or processing at the outlet resemble the supply of ice cream by parlors (as clarified in Para 4.2 of the Circular), and thus qualify as "goods." However, items like pasta and shakes that are cooked, blended, or prepared at the outlet constitute "restaurant service."
The Authority observed:
“We do not find any legal impediment under GST Law which prohibits a registered taxable person from carrying on the business of restaurant service and supply of goods as a Trader from the same place of business.”
In view of this, the AAR ruled that the Applicant is permitted to charge GST as goods for pre-manufactured items and as services for prepared items. However, the Authority mandated that the Applicant must maintain a separate series of tax invoices and distinct accounting records for the two types of supplies to ensure compliance, particularly regarding Input Tax Credit (ITC) reversals.
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