Restaurant & sweetshop operated from same premises are not 'Composite Supplies' of restaurant services: AAAR
[Kundan Misthan Bhandar, In re [2019] 105 taxmann.com 364 (AAAR-Uttarakhand)]
The applicant is running sweetshop and a restaurant in two distinctly marked separate parts of the same premises and also maintaining separate accounts and billings for the two types of businesses. It
has sought an Advance Ruling on whether the supply of sweets, namkeens, cold drinks and other edible items from a sweetshop which also runs a restaurant is a supply of goods or a supply of service?
The Authority for Advance Ruling held that the above supply shall be treated as a supply of service and sweetshop will be treated as an extension of restaurant. The applicant filed an appeal before the Appellate Authority for Advance Ruling.
The Appellate Authority for Advance Ruling observed that as per the CGST Act, 2017, 'composite supply' consists of two or more taxable supplies of goods or services or both which are naturally bundled and supplied in conjunction with each other. The supply of food to customers in a restaurant or as a takeaway from the restaurant counter which is being billed under restaurant sales head should fall under 'composite supply' of restaurant services.
However, goods supplied to customers through sweetshop counter have no direct or indirect nexus with restaurant services. Anyone can come and purchase any item of any quantity from the counter without visiting the restaurant. These sales are completely independent of restaurant activity and will continue even when the restaurant is closed.
The Appellate Authority for Advance Ruling held that in case of sale of food items from restaurant, GST rates on restaurant service will be applicable on all such sales and ITC will not be allowed. In case of sale of those items from sweetshop counter it will be treated as supply of goods and GST rates of the respective items being sold will be levied and ITC will be allowed on such supply.
[Kundan Misthan Bhandar, In re [2019] 105 taxmann.com 364 (AAAR-Uttarakhand)]
The applicant is running sweetshop and a restaurant in two distinctly marked separate parts of the same premises and also maintaining separate accounts and billings for the two types of businesses. It
has sought an Advance Ruling on whether the supply of sweets, namkeens, cold drinks and other edible items from a sweetshop which also runs a restaurant is a supply of goods or a supply of service?
The Authority for Advance Ruling held that the above supply shall be treated as a supply of service and sweetshop will be treated as an extension of restaurant. The applicant filed an appeal before the Appellate Authority for Advance Ruling.
The Appellate Authority for Advance Ruling observed that as per the CGST Act, 2017, 'composite supply' consists of two or more taxable supplies of goods or services or both which are naturally bundled and supplied in conjunction with each other. The supply of food to customers in a restaurant or as a takeaway from the restaurant counter which is being billed under restaurant sales head should fall under 'composite supply' of restaurant services.
However, goods supplied to customers through sweetshop counter have no direct or indirect nexus with restaurant services. Anyone can come and purchase any item of any quantity from the counter without visiting the restaurant. These sales are completely independent of restaurant activity and will continue even when the restaurant is closed.
The Appellate Authority for Advance Ruling held that in case of sale of food items from restaurant, GST rates on restaurant service will be applicable on all such sales and ITC will not be allowed. In case of sale of those items from sweetshop counter it will be treated as supply of goods and GST rates of the respective items being sold will be levied and ITC will be allowed on such supply.
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