2019 (10) TMI 758 - AAR - GST

Rate of GST - prepared and served food and drinks - input tax credit - HELD THAT - The packaged goods enlisted by the applicant like loose leaf masala tea Assam Premium Tea etc are not articles of foods and drinks sand are covered under goods. The supplies of such commodities are supplies of goods. They are covered under Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 and under Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017 - the transaction is covered under (c) as the transaction is supply of goods by a restaurant eating joint including mess canteen etc. Since this notification is applicable only to supply of services and not supply of goods only Notification No. 1/2017- Central Tax (Rate) is applicable and hence all the supply of goods which are enlisted in the list produced by the applicant are taxable as supply of goods and at rates applicable as per Notification No. 1/2017- Central Tax (Rate) dated 2806.2017 and amended from time to time. Input tax credit - HELD THAT - Since the goods are supplied and output taxis payable on the same the applicant is eligible to take applicable input tax credit which is admissible as per the GST Laws.

Summary

Issues Involved:
1. Applicability of GST rate on packed food products
2. Admissibility of input tax credit on packed food products sold

Analysis:

Issue 1: Applicability of GST rate on packed food products
The applicant, a Private Limited company engaged in the business of preparing and selling beverages, cakes, savoury items, and packed food products, sought an advance ruling on the GST rate applicable to their packed food products. The applicant classified their services under Group 99633 Service Code 996331, charging GST at 5% as it falls under the category of restaurant services. However, the applicant also sells packaged food products like loose leaf tea, Dip Tea bags, and bakery products, which are not consumed as is but require further preparation. The Authority for Advance Ruling examined the nature of these products and concluded that they are goods covered under Notification No. 1/2017-Central Tax (Rate). The ruling clarified that the supply of such goods is taxable under the GST laws as supply of goods, not services, and should be taxed at the rates specified in the notification.

Issue 2: Admissibility of input tax credit on packed food products sold
The Authority for Advance Ruling determined that since the packed food products sold are considered as supplies of goods and are subject to GST, the applicant is eligible to claim input tax credit on the tax paid for these goods. The ruling emphasized that the applicant can avail applicable input tax credit related to the supply of such goods, as per the provisions of the GST laws.

In conclusion, the ruling clarified that the sale of packed items like packaged food products that require further cooking operations and other packaged food products not processed by the applicant are taxable at the appropriate rates specified under Notification No. 1/2017-Central Tax (Rate). Additionally, the applicant is entitled to claim input tax credit on the tax paid for the supply of such goods, in accordance with the GST laws.