2024 (8) TMI 376 - AAR - GST

Classification of supply - supply of goods or services - Pani Puri, Masala Chat, Punjabi Lassi, Sev Puri, Samosa Chat, Vada Pav, Pav Bhaji cooked and sold out without a brand name - falls under restaurant sales taxable @5% or not - applicable rate of GST on restaurant service - HSN code and tax rate. Classification of supply - supply of goods or services - Pani Puri, Masala Chat, Punjabi Lassi, Sev Puri, Samosa Chat, Vada Pav, Pav Bhaji cooked and sold out without a brand name - falls under restaurant sales taxable @5% or not - HELD THAT - From the details provided by the taxpayer, it is 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. We also find that the supplied items carry no brand name. 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. The apt classification for the service of serving of cooked items across the counter, which is provided by the applicant, is 996331. Applicable rate of GST on restaurant service - HELD THAT - As per N/N. 11/2017-Central Tax (Rate) dated 28-06-2017, as amended by N/N. 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 - If the applicant falls within the above category, the rate of tax is 5%, without the option of availing input tax credit. However, in case the services are supplied from the premises of hotels, inns, guest houses, clubs, camp sites 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, then, the rate of GST applicable is 9% each towards both CGST and SGST. HSN code and tax rate - HELD THAT - The question cannot be answered since they have not provided the HSN and tax rate under which they have classified the items. Further, no comments can be offered on the relevance of composition scheme without information on the total turnover of the applicant.

Summary

Issues:
1. Classification of supplies by a bakery as restaurant services for GST taxation.
2. Determination of applicable GST rates for supplies made by the bakery.
3. Verification of the correctness of the HSN code and tax rate adopted by the bakery.

Analysis:

Issue 1: Classification of supplies as restaurant services
The applicant, a bakery, sought an advance ruling on whether supplies like Pani Puri, Masala Chat, Punjabi Lassi, etc., made through a separate counter qualify as restaurant services. The Authority noted that as per Schedule II to the CGST Act, a composite supply of goods for human consumption as part of a service constitutes a service. The bakery provided ready-to-eat items to customers without a brand name, falling under the category of services provided by restaurants. The appropriate classification for such services was determined to be HSN 996331, attracting a GST rate of 5%.

Issue 2: Determination of applicable GST rates
The Authority clarified that if the bakery operates within specific premises like hotels or guest houses with a declared tariff above a certain threshold, the GST rate applicable would be 18%. However, if not within such premises, the GST rate would be 2.5% each for CGST and SGST, provided no input tax credit was availed. Therefore, the applicable GST rate for the bakery's supplies depended on its location and the nature of the establishment.

Issue 3: Verification of HSN code and tax rate
The Authority highlighted that since the bakery did not provide information on the specific HSN code and tax rate adopted for the food items in question, no ruling could be given regarding the correctness of the same. It was emphasized that without this crucial information, a determination on the accuracy of the HSN code and tax rate could not be made.

In conclusion, the Advance Ruling Authority classified the bakery's supplies as restaurant services under specific GST provisions, outlined the varying GST rates based on the bakery's location, and highlighted the necessity of providing complete information for accurate rulings on HSN codes and tax rates.