👍👍👍👍👍Ice-cream as a dessert in food thali to attract less GST than when sold independently – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/todays-paper/tp-economy/ice-cream-as-a-dessert-in-food-thali-to-attract-less-gst-than-when-sold-independently/article66587130.ece

When ordered as a dessert, a 5 per cent GST is imposed as against 18 per cent for an ice-cream bought separately

Since restaurant services attract a 5 per cent GST, supply of prepared food and ice-cream will affect the same | Photo Credit: Moorthy M

Having an ice-cream as dessert in your dinner plate at a restaurant will help you to pay less Goods & Services Tax (GST). However, if you order an ice-cream separately , then you will have to pay higher GST.

Giving advance ruling on queries posed Ahmedabad based-HRPL Restaurants Private Limited, Gujarat’s Authority for Advance Rulings (GAAR) said, “The readily available ice-creams, not prepared in the outlets of applicant, sold over the counter are supply of goods. However, an ice-cream when ordered and supplied along with cooked or prepared food through their outlets would assume the character of composite supply, wherein the prepared food being the principal supply and hence qualifies as ‘restaurant services’.”

Composite supply

Under GST, a composite supply would mean a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. Here, principal supply means supply of goods or service which constitutes the predominant element and to which any other supply is ancillary.  GST rate of principal supply would be rate for entire composite supply.

Authority for Advance Ruling (AAR) said that the supply of ice-cream along with cooked or prepared food, falls within the ambit of restaurant services. . Since restaurant services attract GST at the rate of 5 per cent which means composite supply of prepared food and ice-cream will affect the same.

However, the readily available ice-creams [not prepared in their outlets and sold over the counter) is supply of goods. “ This is similar to supply of ice-cream from ice-cream parlour, leviable to GST at the rate of 18 per cent,” it said.

GST council’s clarification

With the latest ruling, issue of GST on ice-cream is back in news even after GST Council in its Lucknow meeting during September 2021 recommended to issue a clarification. Accordingly a circular was issued which said that such places sell already manufactured ice-cream and they do not have a character of a restaurant. “Ice-cream parlours do not engage in any form of cooking at any stage, whereas, restaurant service involves the aspect of cooking/preparing during the course of providing service,” it said.

It clarified that  ice-cream parlours sell already manufactured ice-cream and do not cook/prepare ice-cream for consumption like a restaurant. “It is supply of ice-cream as goods and not as a service, even if the supply has certain ingredients of service,” it said. 


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