Ready-to-eat bakery items may qualify as restaurant services, with GST rate depending on specified premises conditions.

Prepared bakery items sold across the counter in ready-to-eat form were treated as restaurant services under HSN 996331 because the supply involved cooked food supplied for consideration in a manner covered by Schedule II clause 6(b). The operative tax treatment follows the restaurant-services notification: 5% GST applies where the specified premises exclusion does not apply and no input tax credit is taken, while 18% applies where the specified premises condition is attracted. The note therefore clarifies that counter-sale bakery items can fall within the restaurant-service classification depending on the factual conditions stated in the notification.

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Issues: Whether the prepared bakery items sold across the counter in ready-to-eat condition constitute restaurant services taxable at the applicable rate under the GST notifications.

Analysis: The supply was examined in the context of clause 6(b) of Schedule II, which treats certain supplies of food or drink, when supplied for consideration, as a supply of services. On the facts supplied, the items were cooked and sold across the counter to customers for consumption at the counter, without a brand name, and were therefore treated as services falling under HSN 996331, covering services provided by restaurants, cafes and similar eating facilities including takeaway, room service and door delivery. The applicable rate was linked to the notification governing restaurant services, with 5% GST available where the specified exclusion for certain hotel and similar premises does not apply and no input tax credit is taken, and 18% where the specified premises condition is attracted.

Conclusion: The supply was held to be restaurant service under HSN 996331, taxable at 5% or 18% depending on the specified conditions, with no input tax credit where the concessional rate applies.

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