In the current Advance ruling the applicant is engaged in three types of activities:
1. Running a sweet shop.
2. Running a restaurant.
3. Providing outdoor catering.
The questions raised by taxpayer are as under:
Sweetshop related questions:
(a) Whether sale from the portion of the sweetmeats and bakery shop should be categorized as supply of goods?
(b) Whether input tax credit should be eligible on the sale of items specified in the preceding question?
Restaurant related questions:
(c) Can the supply of food items and beverages from the facility which offers the opportunity of eating at the same premises be classified as restaurant services attracting a rate of GST of 5%?
(d) Can input tax credit be availed on restaurant services provided in question (c) above?
(e) In case of receipt of common input tax credit in the form of inputs, input services andcapital goods, will reversal of input tax credit be required in terms of Rule 42 and 43 of the CGST Rules 2017?
Catering service related questions:
(f) Will the catering services provided to the educational institution qualify as an exempt supply based on the agreement?
Applicant/ Taxpayer submission in brief:
The applicant is engaged in supply of sweetmeats, namkeens and bakery items off the counter in the form of takeaways.
The applicant is also engaged in preparing and serving fast food snacks and beverage items which can either be consumed at the premises or allowed as takeaways.
Both the activities are carried out from the place of business of the applicant having two segregated portions, as submitted.
The applicant argues that the aforesaid two sections are separated not only in respect of billing counters but the applicant maintains separate registers and books of accounts for two types of business.
The applicant has entered into an agreement with Sri Sri Academy, a secondary educational institution, to serve food items on pre decided monthly cost basis. The copy of agreement between Sri Sri Academy and the applicant is submitted.
The applicant expresses that the supply of sweetmeats, namkeens and bakery items from the sweet parlour should be considered as supply of goods as no iota of service is attached in takeaway counter.
The applicant doesn’t form different opinion regarding reversal of input tax credit where common input, input services and capital goods are used for both the premises.
Sri Sri Academy qualifies within the definition of education institution as defined in explanation (y) of Notification No. 12/2017 Central Tax (Rate) dated 28/06/2017, as amended from time to time and supply of catering services to Sri Sri Academy should be exempted as per entry serial no 66(b)(ii) of the said notification.
The applicant had also produced evidence of separate billing, book keeping, purchase register, sale register and bank statement for sweetmeat and restaurant business.
The ruling provided by Authority of Advance ruling is as under:
(i) Supply of food and beverages from the sweetmeats counter by the applicant, where the customers have not been provided with any services in relation to consume the same in the premises, shall be categorized as supply of goods and the applicant is eligible to avail input tax credit in respect of such supply of goods subject to conditions as laid down in Chapter V of the GST Act and rules made there under.
(ii) Supply of food items and beverages by the applicant which offers the facility of eating in the same premises along with takeaway of the same shall be treated as restaurant services and shall attract tax @ 5% provided that credit of input tax charged on goods and services used in supplying the service has not been taken.
(iii) Supply of catering services to the educational institution, based on the agreement, is found to be covered under entry serial number 66 (b)(ii) of the Exemption Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017, as amended from time to time (corresponding West Bengal State Notification No. 1136 F.T. dated 28.06.2017) and shall, therefore, be exempted from payment of tax.
(iv) Supply of food and beverages to the auditor, guests/ parents on programme days, as it appears from the agreement shall be treated as “outdoor catering” and shall attract tax @ 5% vide entry serial number 7(iv) of the Notification No. 11/2017- Central Tax (Rate) dated the 28th June, 2017, as amended from time to time (corresponding West Bengal State Notification No. 1135 F.T. dated 28.06.2017) provided that credit of input tax charged on goods and services used in supplying the service has not been taken.
(v) The applicant shall follow the principle of apportionment of credit as laid down in sub-section (1) and (2) of section 17 of the GST Act read with rule 42 and 43 of the CGST/WBGST Rules, 2017 in respect of common input tax credit in the form of inputs, input services and capital goods.
To read full Advance ruling CLICK HERE.
Note: Remember that this is an advance ruling and legally it is applicable only on the applicant who has applied for it and any other person cannot use it in his case but one can use this Advance ruling as a reference point to understand the stand of department.