iTC on pastries manufacturing

[Kishore Dintakurthi]

A regular dealer is making pastries and sell them thru Zomato swiggy.

Applicable gst rate is 18% with HsN 1905

He is eligible to claim itc on his purchases.

Is my understanding correct?

Pls express views

[ABHISHEK TRIPATHI]

Dear Sir,

Yes, he may claim ITC, subject to Section 16 of the CGST/SGST Act.

Zomato and Swiggy has nothing to do with your ITC, they are merely an intermediary - as they claim, the platform for supplier and recipient.

[KASTURI SETHI]

Yes. ITC is admissible. Pl. ensure that availment of ITC on purchases condorm to the parameters laid down under Section 16 of CGST Act and availment is not hit by Section 17(5) ibid.

[Kishore Dintakurthi]

Thanks for the replies sir. ITC availment is always subject to satisfaction of respective conditions. The reason behind this query is dealer is of apprehension that Food items arevtaxable @5% without ITC. But we are of the view that 5% without ITC is applicable only when such pastries are sold for dinein as part of restaurant services. If they are sold thru Zomato, swiggy etc, then 18% is applicable with availability of ITC. Pls confirm whether my views are correct.

[KASTURI SETHI]

Dear Querist,

It is my humble request that you should have mentioned full facts of the issue at the first instance. Now it has to be re-examined.

[KASTURI SETHI]

Read, 'conform to' in my reply. Typographical mistake by me.

[Alkesh Jani]

Shri

First of all, I agree with the views expressed by our Experts and further, as you have mentioned that you are a manufacturer of article following under HSN Code 1905, the rate applicable is 18%. The 5% rate is for the restaurant service provider, which is not in your case.

In other words, the article manufactured by you may be supplied to restaurant or directly to the consumer. When restaurant purchases the article at 18% and further supplies the article under “restaurant service” they are not suppose to take the credit and they are required to charge at 5% from their customer.

Please go through the Notification 11/2017 as amended from time to time, at Sl.No.7 it is specifically mentioned "provided by a restaurant, eating joint including mess, canteen,..."

Alternately, if you are engaged in providing the "restaurant services" i.e. manufactured by you and also served by you than No ITC is available.

Hope your query stands answered up to your satisfaction.

Thanks

[Shilpi Jain]

The view given by Alkesh sir is dispute free.

Also refer to a detailed article in this regard which analyses the various case laws (from the pre constitution amendment era) and brings out that in any case these goods supplied would liable as supply of goods and not a service.

https://taxguru.in/goods-and-service-tax/supply-food-goods-service-gst-perspective-earlier-laws.html

However note that this view may be disputed by the department.

AI Summary

Pastry Dealer's GST Rate Set at 18% with HSN Code 1905, ITC Eligibility Confirmed Under Section 16 of CGST/SGST Act. A regular dealer manufacturing pastries and selling them through platforms like Zomato and Swiggy inquires about the applicable Goods and Services Tax (GST) rate and Input Tax Credit (ITC) eligibility. The consensus among respondents is that the applicable GST rate is 18% with HSN Code 1905, and the dealer is eligible to claim ITC, subject to Section 16 of the CGST/SGST Act. The confusion arises from the 5% GST rate applicable to restaurant services without ITC, which does not apply in this case since the pastries are not sold as part of restaurant services.