restaurant services

[Garima Bajaj]

Sir/ Mam

Whether Restaurant services registered under normal scheme and paying tax @5% without ITC, can supply exempt supplies also example- milk, Dahi, Lassi etc, and if yes whether GST needs to be charged on these items also @5% or not.

My second query is whether we have to show ITC in GSTR-3B & then reversed in next row or there is no need to show ITC in 3B

[Shilpi Jain]

Milk supplied in a restaurant would no longer remain a supply of goods. Hence not exempt. Would be liable as restaurant service at 5%.

Suggested to show credit availed and reversal. Though ensure that this credit availed matches your GSTR 2A figure to avoid dispute from department

[Garima Bajaj]

Thanku Mam for your valuable feedback

AI Summary

Restaurant service classification: items served within premises are taxed as restaurant service, not treated as exempt goods. Supplies of consumables like milk, dahi or lassi provided within restaurant premises are treated as restaurant service and taxed at the restaurant service rate. For compliance, disclose input tax credit availed and reverse the appropriate credit in returns, ensuring reconciliation against purchaser-side records to avoid disputes.