Gujarat AAR: Ice Creams Not Prepared in Outlets Attracts 18% GST

The Gujarat Authority for Advance Ruling (AAR) ruled that the supply of ready-to-eat ice cream from outlets could not be treated as restaurant services.

M/s HRLP Restaurant Pvt Ltd (applicant) was engaged in the restaurant business, and they have already sold their ice cream division. The present outlets were broadly categorised into three types:

• Food prepared and cooked in the restaurant,
• Eateries, and
• Ready-to-eat ice creams (which were not prepared/produced).

The main question to be decided was whether the supply of ice cream from any of the applicant’s outlets could be considered a supply of restaurant services.

AAR observed circular No. 177/09/2022-TRU, dated 03rd August 2022 and circular No. 164/20/2021-GST, dated 06th October 2021. AAR understood that the readily available food items not prepared or cooked in the restaurant and sold over the counter by the applicant would not qualify as restaurant services. It shall be considered a supply of goods, irrespective of whether consumed in the outlets/restaurant or by a takeaway.

Accordingly, AAR held that the supply of ice cream from the applicant’s outlets could not be considered a supply of restaurant services. The ready-to-eat ice creams not prepared in their outlets sold over the counter were the supply of goods.  

However, AAR held that when a customer orders ice cream and is supplied along with cooked or prepared food through their outlets, it would assume the character of composite supply. In this scenario, the prepared food is the principal supply and hence qualifies as restaurant services.

For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@clear.in