GST classification of bakery and outlet-prepared foods distinguished between supply of goods and restaurant service.

Pre-manufactured bakery items sold through outlets without cooking, preparation or processing are treated as a supply of goods under GST, with classification following the nature of the product under the HSN. By contrast, pizzas, pastas, salads and shakes prepared or blended at the outlet on customer order are treated as restaurant service, because the preparation element is determinative even if the item is taken away. Goods and restaurant service may be supplied from the same premises, provided turnover, invoicing and accounting records are kept separately and any input tax credit adjustments are made as required.

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Issues: (i) Whether sale of bakery products fully manufactured at the factory and sold through outlets without cooking, preparation or processing is a supply of goods under GST; (ii) Whether preparation and sale of semi-finished items such as pizzas, pastas, salads and shakes at the outlet upon customer order constitutes restaurant service; (iii) Whether the applicant may levy GST differently on goods and restaurant services from the same premises with separate billing and records.

Issue (i): Whether sale of bakery products fully manufactured at the factory and sold through outlets without cooking, preparation or processing is a supply of goods under GST.

Analysis: The applicable circular clarifies that already manufactured food items sold without any cooking or preparation, and without any service element attached to their sale, are to be treated as supply of goods. The items in question are pre-manufactured at a separate premises and are merely sold through outlets. In such a case, the character of the supply remains that of goods, and classification follows the nature of the product under the HSN.

Conclusion: Yes. Such sale is a supply of goods under GST.

Issue (ii): Whether preparation and sale of semi-finished items such as pizzas, pastas, salads and shakes at the outlet upon customer order constitutes restaurant service.

Analysis: The ruling applies the principle that service by way of cooking, preparation or blending of food at the premises is covered by restaurant service, regardless of whether the customer consumes it on the premises or carries it away. The decisive factor is the element of preparation at the outlet, which distinguishes such supplies from mere sale of manufactured goods.

Conclusion: Yes. Such preparation and sale constitutes restaurant service.

Issue (iii): Whether the applicant may levy GST differently on goods and restaurant services from the same premises with separate billing and records.

Analysis: No legal prohibition was found against a registered person carrying on supply of goods and restaurant service from the same place of business. The taxpayer must, however, maintain clear separation of turnover and invoice series to ensure proper tax compliance, including input tax credit reversal where applicable.

Conclusion: Yes. Dual treatment is permissible, subject to separate invoicing and accounting records.

Final Conclusion: The ruling permits item-wise classification of supplies as goods or restaurant service based on the nature of each supply, and allows both types of taxable supplies to be made from the same premises with proper segregation of records.

Ratio Decidendi: A pre-manufactured food product sold without any cooking or preparation is taxable as goods, whereas food prepared or blended at the outlet in response to customer order is taxable as restaurant service; both supplies may coexist from the same premises if separately accounted for.

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