IBACO's Combo Offer Taxed as Service: CGST & KGST Acts Section 2(30), Schedule II 6(b)

The ruling confirmed that the supply of ice creams, chocolates, ice cream cakes, and pizza cakes in IBACO outlets constitutes a composite supply under section 2(30) of the CGST Act and KGST Act. This supply is deemed a service under serial no. 6(b) of Schedule II and is classified under chapter "9963" with a GST rate of 2.5% without input tax credit, as per relevant notifications.

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Issues Involved:
1. Classification of supply of ice creams, chocolates, ice cream cakes, and pizza cakes as a composite supply.
2. Determination of whether the supply is covered under serial no. 6(b) of Schedule II of the CGST Act and KGST Act.
3. Classification under chapter "9963" and applicable GST rate.

Issue-wise Detailed Analysis:

1. Classification of Supply as Composite Supply:

The applicant, a private limited company registered under the GST Act, sought an advance ruling on whether the supply of ice creams, chocolates, ice cream cakes, and pizza cakes in an IBACO outlet can be classified as a composite supply under section 2(30) of the CGST Act and KGST Act. The applicant argued that their offerings, which include air-conditioned seating, service of mixing various ice creams, and other amenities, naturally bundle with the supply of goods in the ordinary course of business. The ruling confirmed that the supply involves both goods and services that are naturally bundled, making it a composite supply as per section 2(30) of the CGST Act.

2. Coverage under Serial No. 6(b) of Schedule II:

The applicant contended that their supply should be deemed a supply of service as per serial no. 6(b) of Schedule II of the CGST Act and KGST Act, which treats certain composite supplies as services. The ruling agreed, stating that the composite supply of goods being food or any other article for human consumption, where such supply or service is for consideration, should be treated as a supply of services. This was supported by the definition and provisions of composite supply under Schedule II of the CGST Act.

3. Classification under Chapter "9963" and Applicable GST Rate:

The applicant sought clarification on whether the supply would be classified under chapter "9963" and subject to a 5% GST rate as per Notification No. 46/2017 dated 14.11.2017, read with Notification No. 11/2017 dated 28.06.2017. The ruling confirmed that the supplies are classified under chapter "9963" and are chargeable to a tax rate of 2.5% without any input tax credit, as per entry no. 7(i) of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 46/2017 - Central Tax (Rate) dated 14.11.2017. This applies to both the CGST Act and KGST Act.

Ruling:

1. The supply of ice creams, chocolates, ice cream cakes, and pizza cakes made as per customer orders and served in IBACO outlets qualifies as a composite supply under section 2(30) of the CGST Act and KGST Act.
2. The composite supply is deemed to be a supply of service as per entry 6(b) of Schedule II to the CGST Act and KGST Act.
3. The supplies are classified under chapter "9963" and are chargeable to a tax rate of 2.5% subject to the conditions under the CGST Act and KGST Act, as per entry no. 7(i) of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 46/2017 - Central Tax (Rate) dated 14.11.2017.

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