Composite supply of customised outlet food service treated as a supply of services, with concessional GST classification applying.

Customized outlet-based supplies of ice creams, chocolates, ice cream cakes and pizza cakes, when provided together with serving, seating, air-conditioning and other ambience-related facilities, constitute a composite supply because the goods and accompanying services are naturally bundled and form one customer-facing transaction with a principal supply. That composite supply is deemed to be a supply of services under Entry 6(b) of Schedule II, as it involves food supplied for consideration in the course of the outlet service model. The supplies are classified under chapter 9963 and attract GST at 2.5% under the relevant rate notification, subject to the prescribed input tax credit condition.

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Issues: (i) Whether the customized supply of ice creams, chocolates, ice cream cakes and pizza cakes made in IBACO outlets, along with associated serving and ambience-related facilities, constitutes a composite supply; (ii) whether such composite supply is to be treated as a supply of services under Entry 6(b) of Schedule II; (iii) whether the supplies fall under chapter 9963 and attract GST at 2.5% under the relevant notifications.

Issue (i): Whether the customized supply of ice creams, chocolates, ice cream cakes and pizza cakes made in IBACO outlets, along with associated serving and ambience-related facilities, constitutes a composite supply.

Analysis: The supplies consist of goods and services supplied together in the ordinary course of business. The food items are made to order, with toppings, serving, seating, air-conditioning, and related facilities forming a single customer-facing supply. The supplies are naturally bundled and one element is the principal supply.

Conclusion: The supply constitutes a composite supply.

Issue (ii): Whether such composite supply is to be treated as a supply of services under Entry 6(b) of Schedule II.

Analysis: Entry 6(b) treats composite supply, by way of or as part of any service, of food or any other article for human consumption for consideration as a supply of services. The applicant's supply is of food items for consideration and is delivered in the course of the outlet service model.

Conclusion: The composite supply is deemed to be a supply of services under Entry 6(b) of Schedule II.

Issue (iii): Whether the supplies fall under chapter 9963 and attract GST at 2.5% under the relevant notifications.

Analysis: The applicable rate entry for restaurant-type supply of food for consideration, as amended, prescribes tax at 2.5% subject to the condition relating to input tax credit. The supply was classified under chapter 9963 and covered by the amended rate notification from the specified date.

Conclusion: The supplies are classified under chapter 9963 and attract GST at 2.5% subject to the stated conditions.

Final Conclusion: The applicant's customized outlet supplies were held to be composite supplies, deemed supplies of service, and taxable at the specified concessional rate under the applicable GST notifications.

Ratio Decidendi: Where food is supplied to customers as part of a naturally bundled outlet-based service model, with principal supply and ancillary service elements forming one composite transaction, the supply is to be classified as a supply of services and taxed under the applicable service-rate entry subject to the prescribed input tax credit condition.

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