Supply Of Ice Cream From The Outlets Cannot Be Considered As Supply Of “Restaurant Services”: AAR

The Gujarat Authority for Advance Ruling (AAR) has ruled that the supply of ice cream from the outlets cannot be considered as the supply of restaurant services.

The two-member bench of Amit Kumar Mishra and Milind Kawatkar has observed that the readily available ice creams that are not prepared in the outlets and sold over the counter are supplies of goods. However, an ice cream that is ordered and supplied along with cooked or prepared food through the outlets would assume the character of composite supply, with the prepared food being the principal supply and hence qualifying as "restaurant services".

The applicant operates under two business models, namely, company-owned restaurants and franchise restaurants. The applicant has sold his ice cream division to South Korea's Lotte Confectionery.

The applicant sought an advance ruling on the issue of whether the supply of ice cream from any of the outlets should be considered as the supply of restaurant services or not.

The applicant submitted that ice cream parlours sell already-manufactured ice cream. Restaurants or eating joints indulge in the supply of food or any other article for human consumption or a drink. Ice-cream parlours do not engage in any form of cooking at any stage. Restaurants and eating joints engage in cooking and preparation during the course of providing services.

The AAR held that ice cream sold by the applicant's outlet would not fall within the ambit of "restaurant service" and its supply of goods, which would attract 18% GST.

The AAR stated that the supply of ice cream from the outlets of the applicant is not classified as "restaurant services." However, the composite supply classifiable under "restaurant service" would attract 5% GST.

Applicant’s Name: HRPL Restaurants P. Ltd.

Date: 22.02.2023

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