TaxTMI 
TaxTMI 
2022 (2) TMI 1212
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..... RichaJalani) 59, Suraj Nagar East, Civil Lines, Jaipur, Rajasthan, 302006(hereinafter the Applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97(2) (a) & (d)given as under:- (a) Classification of any goods or services or both; and (d) Admissibility of input tax credit of tax paid or deemed to have been paid Further, the applicant being a registered person (GSTIN is 08BGKPM6084K2ZQ) as per the declaration given by him in Form (ARA-01) the issue raised by the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the applicant is admitted to pronounce advance ruling. A- SUBMISSION OF THE APPLICANT:(in brief) • M/s Shrivika Foodcraft (hereinafter referred to as "applicant") is looking forward to setup restaurants which will be offering various food items including cooked food, beverages and bakery items. The applicant will obtain a license from FSSAI under the Business Category "Food Services -Restaurants". The applicant is registered under GST having GSTIN 08BGKPM6084K.2ZQ in the state of Rajasthan. • The major food items offere....
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....ill be responsible for overall management of the eating joint and till management. • The eating joint will be equipped to offer its services through following methods: S.No. Item Name 1. Sandwiches / Burgers / Wraps /Continental Food 2. Salads / Indian Food 3. Milk Based Shakes / Beverages 4. Non Milk Based Beverages 5. Brownie 6. Cakes / Pastries 9. Bread/Pizza base/ Bun / Pav 7. Cookies / Rusk 8. Foxnut/Nachos a. Dine In: Applicant will be providing Casual Dining facility to its customers. Dine In is the category where customers' will visit to the eating joint, have an access to look around the displayed food items available and the complete menu and choose to sit and consume it within the restaurant premises. Under this category, customers will be using the restaurant infrastructure for the consumption of food. b. Take Away: Under this method, customers can visit to the eating joint, avail of the infrastructure facilities, look around for the entire display of food items and complete menu available and opts to get the food packed for consume later at desired location as per their own c....
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....mption or any drink, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied." 3. 3 The explanatory notes to the classification of service state that "restaurant service" includes services provided by Restaurants, Cafes and similar eating facilities including takeaway services, room services and door delivery of food. Therefore, it is clear that takeaway services and door delivery services for consumption of food are also considered as restaurant service and, accordingly, service by an entity, by way of cooking and supply food, even if it is exclusively by way of takeaway or door delivery or through or from any restaurant would be covered by restaurant service. This would thus cover services provided by cloud kitchens/central kitchens. 3.4 Accordingly, as recommended by the Council, it is clarified that service provided by way of cooking and supply of food, by cloud kitchens central kitchens are covered under "restaurant service" as defined in notification No. 11/2017- Central Tax (Rate) and attract 5% GST [without ITC]" ....
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....upplying the service has not been taken [Please refer to Explanation No. (iv)] (iv) Supply of 'outdoor catering', at premises other than 'specified premises ' provided by any person other than,- (a) suppliers providing 'hotel accommodation ' at 'specified premises or (b) suppliers located in 'specified premises 2.5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation (iv)] (v) Composite supply of 'outdoor catering ' together with renting of premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organising a function) at premises other than 'specified premises ' provided by any person other than,- (a) suppliers providing 'hotel accommodation ' at "specified premises ', or (b) suppliers located in 'specified premises'. 2.5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation (iv)] (vi) Accommoda....
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....red in exclusion. • Now, after primarily understanding that the supply of food and beverages shall be treated as service as per Entry 6 of Schedule II, the classification of the service under Notification 11/2017-CT (Rate) has to be determined and for such purpose, the coverage of the above Entry 7(ii) of the notification read with definition of 'restaurant service' has to be understood. • The infrastructure facilities and amenities made available by the eating joints are evenly offered for all the customers and there is no separate demarcation of area in the premises of the eating joint for customer taking the services by the different methods be it Dine In, Take Away or Delivery. The kitchen area is common for all the orders; the staff is commonly handling the orders whether to serve in the premises or to serve for consumption away from the premises as per the desire of the customer. The display of food items is also common for service by any of the methods. There is a common billing counter for all the orders and no separate billing mechanism for the orders to be served on the table or to be consumed outside. • Hence Entry No. 7(ii)....
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....ices' has also squarely covered the matter involved in the present case under the heading 'Services by cloud kitchens/central kitchens'. • That the circular has clarified that when the service is provided by an entity, by way of cooking and supply of food, even if it is through or from any restaurant, it would be covered by restaurant service. The circular has categorically mentioned that this would thus cover services provided by cloud kitchens/central kitchens. • That on the basis of the above clarification, the applicant is of an opinion that the supply of food by the entity partially or completely cooked in the central kitchen through or from the various eating joints would be covered by 'restaurant service'. • Hence in view of the applicant, the supply of all the items of food and beverages offered by the eating joints of appellant are classifiable under HSN 9963 under SI. No. 7(ii) of Notification No. 11/2017 - CT (Rate) dated 28.06.2017 amended as on date and are taxable at the rate of 5%. • That further in the said entry in SI. No. 7(ii), a condition has been mentioned in the Notification that credit of....
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.... shall be treated as supply of goods, whether Input Tax Credit will be available to the applicant? 4) Il the supply shall be treated as supply of services, whether Input Tax Credit will be available to the applicant? 2. We will take up all the above questions for discussion one by one. The first question pertains to nature of supply whether it is supply of goods or supply of service. Based on the submission of the applicant, we find that applicant is looking forward to setup restaurants in form of central kitchen/ eating joints for sale of following food items alongwith various modes of services thereof to their customer for a consideration: S.No. Item Name 1. Sandwiches / Burgers / Wraps /Continental Food 2. Salads / Indian Food 3. Milk Based Shakes / Beverages 4. Non Milk Based Beverages 5. Brownie 6. Cakes / Pastries 9. Bread/Pizza base/ Bun / Pav 7. Cookies / Rusk 8. Foxnut/Nachos As per facts laid down in their written submission, the applicant will have a dedicated central kitchen for the preparation of food items and there will be various eating joints under the brand name of applicant from where the ....
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....ation' having value of supply of a unit of accommodation above one thousand rupees but less than or equal to seven thousand live hundred rupees per unit per day or equivalent. 6 - (ii) Supply of 'restaurant service' other than at 'specified premises' 2.5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation no, (iv)] (iv) Supply of 'outdoor catering', at premises other than 'specified premises' provided by any person other than- (a) suppliers providing 'hotel accommodation' at 'specified premises', or (b) suppliers located in 'specified premises'. 2.5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation (iv)] (v) Composite supply of 'outdoor catering' together with renting of premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organising a function) at premises other than 'specified prem....
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....f such service at 'specified premises'. In the notification No. 11/2017-CT(R) dated 28.06.2017 at explanation No (xxxvi) the "specified premises defined as under: "Specified premises" means premises providing "hotel accommodation" services having declared tariff of any unit of accommodation above seven thousand five hundred rupees per unit per day or equivalent. In present facts since the eating joints of the appellant are not intended to be located in any premises having hotel accommodation services. Hence the case of the applicant is not covered in exclusion as premises will be as standalone restaurant(s). Further, we can also visit the Circular No. 164 /20 /2021-GST dated 6-10-2021 in respect of 'Clarifications regarding 'Services by cloud kitchens/central kitchens'. The clarification in the Circular is reproduced as under for reference:- "3. Services by cloud kitchens/central kitchens: 3. 1 Representations have been received requesting for clarification regarding the classification and rate of GST on services rendered by Cloud kitchen or Central Kitchen. 3.2 The word "restaurant service" is defined in Notification No....
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....view that in the instant case supply made by the applicant is classifiable under Chapter, Section or Heading 9963 under SI. No. 7(ii) of Notification No. 11/2017-CT (Rate) dated 28.06.2017 as amended time to time and is taxable at the rate of 5% (without ITC). 3. Now, we are required to discuss the Third & forth question of the applicant which is related to availability of Input Tax Credit (ITC) to the applicant if the supply considered as supply of goods or as supply of service. In this regard, we find that supply to be made by the applicant is covered under "restaurant service", as defined in notification No. 11/2017- Central Tax (Rate) as amended and attract 5% GST (2.5% CGST + 2.5% SGST) provided that credit of input tax charged on goods and services used in supplying the service has not been taken. The aforesaid notification is prescribing rate with specific condition, no option is provided. Wherever the intention to provide option is there, it is clearly mentioned by providing multiple rates 'with ITC' and 'without ITC'. Thus, we find that applicant is not entitled to take ITC as per condition laid down at SI. No. 7(ii) of Notification No. 11/2017 - CT (Rat....