Ready-to-eat food sales with seating do not create restaurant service; GST depends on HSN classification and notification rates.

Selling ready-to-eat, pre-packed food and bakery products from premises with only a place for on-site consumption does not amount to restaurant service, because restaurant service requires preparation and service of food at the premises pursuant to customer orders. The activity was therefore not treated as a restaurant service provider. The food items were then classified category-wise under the appropriate HSN entries based on their nature and composition, with GST applied at the notified rates. Certain products were taxed at different rates depending on the relevant notification entry, while items such as butter milk and unbranded natural honey were exempt where specifically covered by the notification.

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Issues: (i) Whether resale of food and bakery products from the applicant's premises, with only a facility for consumption on the spot, amounts to restaurant services; (ii) Whether the HSN classification and applicable GST rates declared by the applicant for the various food products are correct.

Issue (i): Whether resale of food and bakery products from the applicant's premises, with only a facility for consumption on the spot, amounts to restaurant services.

Analysis: A restaurant service involves preparation of food in the premises and service pursuant to customer orders. The applicant only sold ready-to-eat, pre-packed food items purchased from other dealers and did not have kitchen facilities for cooking at the premises. Mere provision of tables or a place to consume the food does not convert the business into a restaurant.

Conclusion: No. The activity does not fall under restaurant services.

Issue (ii): Whether the HSN classification and applicable GST rates declared by the applicant for the various food products are correct.

Analysis: The products were examined category-wise and classified according to their nature, composition, and HSN entries. Sweetmeats, namkeens, chips, pickles, jams, juices, payasams, sandwiches, parathas, ready-to-eat combinations, honey, and cones were placed under the relevant HSN headings and taxed at the rates specified in the GST rate notifications. Some items were found taxable at 5%, 12%, or 18%, while certain items such as butter milk and unbranded natural honey were exempt under the applicable notification entries.

Conclusion: The classifications and tax rates were broadly upheld as determined category-wise in the ruling.

Final Conclusion: The applicant was not treated as a restaurant service provider, and the various food products were classified under the relevant HSN entries with GST applied at the notified rates, including exemptions where specifically provided.

Ratio Decidendi: Mere facility for consumption on the premises does not make a seller of ready-to-eat pre-packed food a restaurant service provider; classification and taxation must follow the product's HSN entry and the applicable rate notification entry.

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