Supply of Bakery Items in Air-Conditioned premises of Applicant are Restaurants Services

ODISHA AUTHORITY FOR ADVANCE RULING

The Question and Ruling as follows :

Q.(a) Whether supply of Cakes, bakery items, ice creams, chocolates, drinks and other eatable products prepared at the premises of the applicant and supplied to the customers from the counter with the facility to consume the same in the air-conditioned premises itself covered under the restaurant services?

Ans: Yes, answer is in the affirmative

Q.(b) Whether supply of items such as birthday stickers, candles, birthday caps, snow sprays etc. related items which are essentially used in birthday celebration can be classified as Composite Supply defined under Section 2(30) of the CGST Act, 2017 and Section 2 (30) of the OGST Act, 2017 wherein the principal supply of goods consists of bakery items, chocolates while the supply of services include the supply of air conditioned place to sit and to celebrate birthday.

Ans: The answer is in the ‘Negative’.

Q.(c) Whether the sale of handmade chocolates which are manufactured in the workshop of the Applicant and are utilised for the purpose of providing other services such as shakes, brownies and are also retailed by packing in different containers as per the choice of the customer will be covered under the under the restaurant services?

Ans: Yes, answer is in the affirmative.

Q.(d) What is the nature and rate of tax applicable to the following items supplied from the premises of the Bakery shop of the Applicant-

(i) Items such as Birthday caps, knife, decorative items which are bundled along with the cakes and are utilised by the Customers in the premises of the outlets.

Ans: Replied at para 4.5 & 4.6 as above.

(ii) Items such as Birthday caps, knife, decorative items which are bundled along with the cakes and are taken away by the Customers from the outlets.

Ans: Replied at para 4.5 & 4.6 as above.

(iii) Items such as chocolate, cookies which are prepared in the nearby workshop of the Applicant and then processed / customized in the outlets of the Applicant before selling to the customers

(iv) Items such as chocolate, cookies which are prepared in the nearby workshop of the Applicant and then processed/ customized in the outlet as per the choice and consumed in the premises itself.

Ans: The supply of the items as mentioned in clause (iii) & (iv) from the premises of the Bakery shop of the Applicant qualifies as ‘composite supply’ under Section 2(30) of the COST Act . The said composite supply shall be deemed to be a supply of service as per the Entry 6(b) of Schedule II to the CGST Act and more specifically the ‘Restaurant Service’ and rate of tax is 5% without any input tax credit (2.5% for CGST and 2.5% for SGST).

Q.(e) Supposing, the Applicant’s firm is covered under the Composite Scheme then in such cases what will be the tax liability charged on goods which are tax free without opting for composite scheme such as bread etc.

Ans: Since the applicant is a manufacturer of ‘Ice Creams’, he is not eligible for ‘Composition Scheme’.

Q.(f) Suppose, the Applicant’s firm is covered under composite Scheme, then in such circumstances whether the products which are prepared in the workshop but are sold only after certain customizations in the outlets will also be covered under the composite scheme or not?

Ans: Since the applicant is a manufacturer of ‘Ice Creams’, he is not eligible for ‘Composition Scheme’.