Characterisation of supply: ice cream prepared and served is restaurant service taxed without credit; otherwise treated as goods with credit.

Ice cream supplied by a retail outlet is characterised by its factual role: when prepared and served as part of the outlet's food service (including dine in or incorporation into prepared foods/beverages) it constitutes restaurant services and is taxable under the restaurant services classification at 5% GST without input tax credit; ice cream manufactured outside the outlet and sold over the counter without processing, and all business to business supplies, constitute supply of goods and attract the goods rate and input tax credit treatment under the applicable rate notification. Separate GST registration for a manufacturer does not alter these characterisations or GST consequences.

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Issues: (i) Whether supply of ice cream manufactured at the same premises or at a separate manufacturing unit and sold through the applicant's retail outlets (over the counter/B2C) qualifies as "restaurant services" taxable at 5% GST without eligibility of input tax credit; and whether tax treatment differs for business-to-business (B2B) supplies. (ii) If not restaurant services, whether such supply is to be classified as supply of goods attracting 5% GST with eligibility of input tax credit, and the applicable rate where a separate GST registration exists for the ice cream manufacturing unit supplying both B2B and B2C.

Issue (i): Whether B2C supplies of ice cream (manufactured at retail outlets or at a separate manufacturing unit) sold through the applicant's retail outlets qualify as restaurant services taxable at 5% without input tax credit, and whether B2B supplies attract different treatment.

Analysis: Where ice cream is prepared and served at the retail outlet as part of the outlet's food service (including dine-in or when served along with cooked food or incorporated into prepared items such as falooda, milkshakes, juices), the supply forms part of the service of supplying food by a restaurant and falls within the restaurant services description under Notification No. 11/2017-CT (Rate) dated 28.06.2017 and Schedule II of the Central Goods and Services Tax Act, 2017. Ice cream that is manufactured outside the retail outlet and merely sold over the counter without any processing or incorporation into prepared food assumes the character of a supply of goods. For supplies made as part of business-to-business transactions, where no service is rendered by the retail outlet, the transaction constitutes supply of goods regardless of the place of manufacture.

Conclusion: Ice cream prepared in the retail outlet and supplied to dine-in or retail customers qualifies as restaurant services taxable at 5% GST without eligibility of input tax credit. Ice cream manufactured outside the retail outlet and sold over the counter to B2C customers is a supply of goods, not a restaurant service; however, when supplied along with cooked food or used in prepared food/beverages it will qualify as restaurant service. All B2B supplies of ice cream are to be treated as supply of goods.

Issue (ii): If not covered under restaurant services, whether such supplies are supply of goods attracting 5% GST with input tax credit and the rate where a separate GST registration exists for the manufacturing unit supplying both B2B and B2C.

Analysis: Notification No. 9/2025-Central Tax (Rate) dated 17.09.2025 specifies the rate applicable to supply of ice creams. Where the supply is characterised as supply of goods (including ice cream sold over the counter when manufactured outside the outlet, and all B2B supplies), the supply attracts the rate and credit treatment applicable to goods under Notification No. 9/2025-Central Tax (Rate) dated 17.09.2025. Separate GST registration for a manufacturing unit making supplies on B2B and B2C basis does not alter the character of the transactions: purely goods supplies remain subject to the goods rate and relevant input tax credit rules.

Conclusion: Supplies of ice cream not qualifying as restaurant services shall be treated as supply of goods and attract 5% GST with eligibility for input tax credit as per Sl. No. 141 of Notification No. 9/2025-Central Tax (Rate) dated 17.09.2025. Where a separate GST registration exists for the manufacturing unit and supplies are made on B2B and B2C basis, such supplies shall be treated as supply of goods and attract 5% GST.

Final Conclusion: The Authority rules that whether a supply of ice cream is taxed as restaurant services (5% without input tax credit) or as supply of goods (5% with input tax credit) depends on the factual character of the supply: (a) ice cream prepared and served as part of the retail outlet's food service (including dine-in or served with prepared food/beverages) is restaurant service; (b) ice cream manufactured outside the outlet and sold over the counter, and all B2B supplies, are supplies of goods.

Ratio Decidendi: Ice cream supplied as part of food prepared and served by a retail outlet is a composite supply characterised as restaurant services under Notification No. 11/2017-CT (Rate) dated 28.06.2017 and Schedule II of the Central Goods and Services Tax Act, 2017; ice cream sold over the counter without processing or as B2B supply is a supply of goods and falls under the rate provisions of Notification No. 9/2025-Central Tax (Rate) dated 17.09.2025.

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