TaxTMI 
TaxTMI 
2021 (4) TMI 424
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....s? (b) Whether supply of items such as birthday stickers, candles, birthday caps, snow sprays etc. related items which are essentially used in birthday celebration can be classified as Composite Supply defined under Section 2 (30) of the CGST Act, 2017 and Section 2 (30) of the OGST Act, 2017 wherein the principal supply of goods consists of bakery items, chocolates while the supply of services include the supply of air conditioned place to sit and to celebrate birthday. (c) Whether the sale of handmade chocolates which are manufactured in the workshop of the Applicant and are utilised for the purpose of providing other services such as shakes, brownies and are also retailed by packing in different containers as per the choice of the customer will be covered under the under the restaurant services? (d) What is the nature and rate of tax applicable to the following items supplied from the premises of the Bakery shop of the Applicant (i) Items such as Birthday caps, knife, decorative items which are bundled along with the cakes and are utilised by the Customers in the premises of the outlets. (ii) Items such as Birthday caps, knife, decorative items which are bundled along ....
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...., cookies, etc. are manufactured in the workshops as these goods require heavy machinery and are labour intensive in nature and due to these features the same are prepared in the nearby workshop and brought to the outlets for further customization. It is hereby clarified that nothing is sold directly from the workshop and each and every item is brought to the outlet for sale. 2.4 That, outlets of the applicant are equipped with all the facilities to dine such as table and chairs, air conditioner, drinking water, stylish lights for providing a nice ambience which provide an overall good experience to the customers. It is necessary to mention here that, the customers are provided with the option of either enjoying their food in the outlets itself by utilizing the facilities present in the outlets or they are at the liberty to take away their food. 2.5 That, the customer has the option to customize his order by demanding to add or remove any particular ingredient from any item or to add any topping of his choice according to his taste as all these facilities are available in the outlets. 2.6 That, the customers also have the option of ordering artisan cakes as per their whims and f....
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....chasing goods from the market as the Applicant is not indulged in the business of these items. 2.14 That, this minority of goods which form an essential & inseparable part of celebrations / birthdays are supplied by the applicant as these form a set of bundled goods which is kind of inseparable as it is natural for a person to demand a knife who is taking a cake. Further, it is very much essential to mention here that, these goods constitutes about a mere of 0.5% of the total turnover of the Applicant and give insignificant profit but the same are necessary to be supplied as they form a part of inseparable combo. 2.15 That, the nature of business in the present case is not merely selling of goods but is a combination of goods and services in which the customer avails the above mentioned services / facilities along with the goods in the outlets of the Applicant. 2.16 That, the numerous facilities along with options of various customizations / special packaging etc. provided to the customers differentiate the applicant's bakery from any normal bakery which are generally involved in resale of manufactured goods. 3.0 The personal hearing was fixed on 04.12.2020 under due intima....
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....he basis of the above facts and established legal position, the Goods & Services supplied by the Applicant i.e. making of bakery items, cakes, chocolates, cookies, beverages and supplying the same to customers in a specified and special manner comes within the purview of composite supply and more specifically Restaurant Services and hence should attract a GST levy of 5% under the composite scheme. F) That the applicant relied the decisions of the following AARs. i) Advance Ruling No. KAR ADRG 68/2019 passed by the Authority on Advance Rulings in Karnataka in the application filed by M/s Hatsun Agro Product Ltd. ii) Advance Ruling No. 08/2018-19 passed by the Authority on Advance Rulings for the State of Uttarakhand filed by M/s Kundan Mistan Bhandar. Discussion & findings 4.0 We have considered the submissions made by the applicant in their application for advance ruling as well as the arguments advanced by Sri Suresh Tibrewal during the personal hearing. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts. We find that the questions before us essentially pertain to classification of supply of goods/services, the rate ....
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....te supply" means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;" Since the supplies made by the applicant in its outlets involve both supplies of goods and services, with one of them as principal supply i.e. supply of goods which are naturally bundled and supplied in conjunction with each other, therefore, the same has to be considered as a composite supply. Further, Restaurant Services have been defined under the purview of composite supply (in clause (b) of para 6 of Schedule -II), the relevant extract is as under. 4.3 Entry No. 6 of the Schedule-II to the Central Goods and Services Tax Act, 2017 reads as under : The following composite supplies shall be treated as a supply of services, namely :- (a) works contract as defined in clause (119) of section 2; and (b) supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alco....
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.... on goods or services used exclusively in supplying such services has not been taken; and (b) Credit of input tax charged on goods or services used partly for supplying such service and partly for effecting other supplies eligible for input tax credits, is reversed as if supply of such service is an exempt supply and attracts provisions of sub-section (2) of section 17 of the Central Goods and Services Tax Act, 2017 and the rules made there under." On cursory reading of the above, it is seen that the applicant is supplying items of food as a part of service and since the provision of eating in the premises is provided or the customers may take the same away from the applicant's place, the transactions under question are covered under the amended provision of Entry 7(i) of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 as amended by Notification No. 46/2017-Central Tax (Rate), dated 14-11-2017 and attracts a tax of 2.5% without any input tax credit. 4.5 As regards supply of items such as birthday stickers, candles, birthday caps, Balloon, Carry Bags, snow sprays etc, we observe that the said related items are being purchased and sold as such without any further....
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....payable on the same, the applicant is eligible to take applicable input tax credit which is admissible as per the GST laws. 4.7 With respect to chocolates, we observe that raw chocolates are manufactured in the nearby workshop of the applicant which are utilised for the purpose of providing other services such as shakes, brownies and are also retailed by packing in different containers as per the choice of the customer . In no case, chocolates are sold as such from the work shop but are customized and sold from the outlets. Therefore, we agree with the submission of the Applicant that sale of handmade chocolates which are manufactured in the workshop and brought to the outlets for further processing will be covered under the 'restaurant services'. 5.0 In view of the above, we rule as follows : Q.(a)Whether supply of Cakes, bakery items, ice creams, chocolates, drinks and other eatable products prepared at the premises of the applicant and supplied to the customers from the counter with the facility to consume the same in the air-conditioned premises itself covered under the restaurant services? Ans: Yes, answer is in the affirmative . Q(b) Whether supply of items su....