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TMI Blog2022 (2) TMI 1212X X X X Extracts X X X X X X X X Extracts X X X X ..... ch or to be further processed for offering the food items or dishes at the choice and desire of consumers - the activity of sale of aforementioned food items alongwith services thereof to be performed by the applicant in respect of central kitchen/ eating joints by way of Dine In, Take away delivery is covered under 'supply' as per section 7 of the CGST Act. 2017 and liable to tax as per section 9 of the CGST Act, 2017. As per explanatory notes to the scheme of classification under heading 9963: Accommodation, Food and Beverage service, the activity to be performed by the applicant will be classified under heading 996331 services provided by Restaurants, Cafes, and similar eating facilities including take away services, Room services, and door delivery of food . In present facts since the eating joints of the appellant are not intended to be located in any premises having hotel accommodation services. Hence the case of the applicant is not covered in exclusion as premises will be as standalone restaurant(s) - the supply of food by the entity partially or completely cooked in the central kitchen through or from the various eating joints would be covered by 'rest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s M/s Shrivika Foodcraft (Prop. Mrs. RichaJalani) 59, Suraj Nagar East, Civil Lines, Jaipur, Rajasthan, 302006(hereinafter the Applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97(2) (a) (d)given as under:- (a) Classification of any goods or services or both; and (d) Admissibility of input tax credit of tax paid or deemed to have been paid Further, the applicant being a registered person (GSTIN is 08BGKPM6084K2ZQ) as per the declaration given by him in Form (ARA-01) the issue raised by the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the applicant is admitted to pronounce advance ruling. A- SUBMISSION OF THE APPLICANT:(in brief) M/s Shrivika Foodcraft (hereinafter referred to as applicant ) is looking forward to setup restaurants which will be offering various food items including cooked food, beverages and bakery items. The applicant will obtain a license from FSSAI under the Business Category Food Services -Restaurants . The applicant is registered under GST having GSTIN 08BGKPM6084K.2ZQ in the state of Rajasthan. The major food it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating joint and till management. The eating joint will be equipped to offer its services through following methods: S.No. Item Name 1. Sandwiches / Burgers / Wraps /Continental Food 2. Salads / Indian Food 3. Milk Based Shakes / Beverages 4. Non Milk Based Beverages 5. Brownie 6. Cakes / Pastries 9. Bread/Pizza base/ Bun / Pav 7. Cookies / Rusk 8. Foxnut/Nachos a. Dine In: Applicant will be providing Casual Dining facility to its customers. Dine In is the category where customers' will visit to the eating joint, have an access to look around the displayed food items available and the complete menu and choose to sit and consume it within the restaurant premises. Under this category, customers will be using the restaurant infrastructure for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tchen or Central Kitchen. 3.2 The word restaurant service is defined in Notification No. 11/2017-CTR as below: - Restaurant service means supply, by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, 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. 3. 3 The explanatory notes to the classification of service state that restaurant service includes services provided by Restaurants, Cafes and similar eating facilities including takeaway services, room services and door delivery of food. Therefore, it is clear that takeaway services and door delivery services for consumption of food are also considered as restaurant service and, accordingly, service by an entity, by way of cooking and supply food, even if it is exclusively by way of takeaway or door delivery or through or from any restaurant would be covered by restaurant service. This would thus cover services provided by cloud kitchens/central kitchens. 3.4 Accordingly, as recommended by the Council, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of supply of a unit of accommodation above one thousand rupees but less than or equal to seven thousand five hundred rupees per unit per day or equivalent. 6 - (ii) Supply of 'restaurant service ' other than at specified premises 2.5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation No. (iv)] (iv) Supply of 'outdoor catering', at premises other than 'specified premises ' provided by any person other than,- (a) suppliers providing 'hotel accommodation ' at 'specified premises or (b) suppliers located in 'specified premises 2.5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation (iv)] (v) Composite supply of 'outdoor catering ' together with renting of premises (includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other article for human consumption or any drink. 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. The only exclusion from the entry is supply of such service at 'specified premises which is also defined in the notification as premises providing hotel accommodation' services having declared tariff beyond a limit, which is not the ease in present facts since the eating joints of the applicant are not intended to be located in any premises having hotel accommodation services. Hence the case of the applicant is not covered in exclusion. Now, after primarily understanding that the supply of food and beverages shall be treated as service as per Entry 6 of Schedule II, the classification of the service under Notification 11/2017-CT (Rate) has to be determined and for such purpose, the coverage of the above Entry 7(ii) of the notification read with definition of 'restaurant service' has to be understood. The infrastructure facilities and amenities made available by the eating joints are evenly offered for all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eting - para 65.22 to 65.29 are as under,- Comments of Mr. Upendra Gupta on asking whether the rate 5% rate is mandatory or optional The notification is issued under section 9 wherein the rate prescribed is 20% for supply. The relevant notification is prescribing rate with specific condition, no option is provided. Wherever the intention to provide option is there, it is clearly mentioned by providing multiple rates 'with ITC and 'without ITC. That Circular No. 164 /20 /2021-GST has been issued on 6lh October 2021 for 'Clarifications regarding applicable GST rates exemptions on certain services' has also squarely covered the matter involved in the present case under the heading 'Services by cloud kitchens/central kitchens'. That the circular has clarified that when the service is provided by an entity, by way of cooking and supply of food, even if it is through or from any restaurant, it would be covered by restaurant service. The circular has categorically mentioned that this would thus cover services provided by cloud kitchens/central kitchens. That on the basis of the above clarification, the applicant is of an opinion that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are different issues to be discussed in respect of which the applicant has asked questions seeking Advance Ruling on the same. They are as under:- 1) Whether the supply of food and beverages (as per illustrative list mentioned in Statement of Facts above) by the eating joints by way of following should be treated as supply of goods or supply of services? a. Dine In b. Take Away c. Delivery 2) What should be the classification and applicable tax rate on the supply made by the applicant? 3) It the supply shall be treated as supply of goods, whether Input Tax Credit will be available to the applicant? 4) Il the supply shall be treated as supply of services, whether Input Tax Credit will be available to the applicant? 2. We will take up all the above questions for discussion one by one. The first question pertains to nature of supply whether it is supply of goods or supply of service. Based on the submission of the applicant, we find that applicant is looking forward to setup restaurants in form of central kitchen/ eating joints for sale of following food items alongwith various modes of services thereof to their customer for a consideration: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such supply or service is for cash, deferred payment or other valuable consideration. As per explanatory notes to the scheme of classification under heading 9963: Accommodation, Food and Beverage service, we find that activity to be performed by the applicant will be classified under heading 996331 services provided by Restaurants, Cafes, and similar eating facilities including take away services, Room services, and door delivery of food . Further, the GST rates on services have been notified by the Government vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended vide Notification No. 20/2019-CT(R) dated 30.09.2019 and the relevant extract of the said notification (as amended) for the present issue is reproduced as under: (1) (2) (3) (4) (5) 7 Heading 9963 (Accommodation, food and beverage services) (i) Supply of 'hotel accommodation' having value of supply of a unit of accommodation above one thousand rupees but less than or equal to seven thousand live hundred rupees per unit per day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... day or equivalent. (d) This entry covers supply of 'outdoor catering', provided by suppliers providing 'hotel accommodation' at 'specified premises', or suppliers located in 'specified premises'. (e) This entry covers composite supply of 'outdoor catering' together with renting of premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organising a function) provided by suppliers providing 'hotel accommodation' at 'specified premises', or suppliers located in 'specified premises', 9 - ; As evident from the tariff above, there is a specific entry for Supply of 'restaurant service' other than at specified premises in Entry 7(ii) and for the purpose of the said Notification, 'restaurant service' has been defined in the notification itself as under: (xxxii) Restaurant service means supply, by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, provided by a restaurant, eating joint including mess, canteen whether for co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral kitchens. 3.4 Accordingly, as recommended by the Council, it is clarified that service provided by way of cooking and supply of food, by cloud kitchens/central kitchens are covered under restaurant service , as defined m notification No. 11/2017-Central Tax (Rate) and attract 5% GST [without ITC] The aforesaid circular has clarified that when the service is provided by an entity, by way of cooking and supply of food, even if it is through or from any restaurant, it would be covered by restaurant service. The circular has categorically mentioned that this would thus cover services provided by cloud kitchens/central kitchens. Hence, we find that the supply of food by the entity partially or completely cooked in the central kitchen through or from the various eating joints would be covered by 'restaurant service' and the supply of all the items of food and beverages offered by the eating joints/central kitchen of applicant are classifiable under HSN 9963 under SI. No. 7(ii) of Notification No. 11/2017-CT (Rate) dated 28.06.2017 as amended time to time and are taxable at the rate of 5% (without ITC). 2. Now, we are required to discuss the second question ..... X X X X Extracts X X X X X X X X Extracts X X X X
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