classification of supply

[Bharat Cholleti]

Dear Sir

In a Bakery there is eating facility some chairs and tables were kept if they wish they can eat then and there or it can be takeaway but there is no service of food sold in the bakery how to treat the supply either goods or service. mere eating facility does it constitute a service without being service.

In some other bakeries there is partial service and partial takeaway in a composition scheme can we charge 5% on service and takeaway @1%?

Please clarify.

[Shilpi Jain]

Service element does not lie only in the service of food at the table. It can also be by way of providing a seating area with the other facilities like ambience, cutlery, etc. So it will still be a service with 5% liability.

[Shilpi Jain]

Ideally speaking, takeaway should be liable as sale of goods, however a different intention seems to come from the GST Council minutes. So safer would be to treat the takeaway also as liable to 5% only.

In case you wish to pay tax @ 1% then there could be dispute from department. Have a look at the below article for further material to support 1%.

[Bharat Cholleti]

Thank you mam

[KASTURI SETHI]

I concur with the views of Madam Shilpi Jain. Also go through the following decisions of AARs :-

(1) Applicant Manoj Mittal 2021 (3) TMI 1093 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL (Decided on 22.3.21).

(2) Applicant :SRI VENKATESHWARA AGENCIES 2020 (6) TMI 163 - AUTHORITY FOR ADVANCE RULINGS, HYDERABAD TELANGANA decided on 02.3.20

[Bharat Cholleti]

Thank you so much sir

AI Summary

Seating facility as service may convert bakery sales into taxable service treatment, risking dispute if treated as goods. Provision of seating, ambience and related on-premises conveniences at a bakery constitutes a service element distinct from sale of goods; while takeaway is ordinarily sale of goods, GST Council guidance and Advance Rulings indicate takeaway may be treated similarly to on-premises consumption, so treating seating and associated amenities as a taxable service is the safer compliance position to avoid departmental dispute.