Fact: – M/s. Kundan Misthan Bhandar (“the applicant”) was engaged in supplying pure food item such as sweetmeats namkeens, cold drink and other edible items from a sweet shop. The applicant is in a dilemma that what is his nature of his business, whether to consider supplies as supply of goods or supply of services and what tax rate is applicable to the supplies.
Issue Involved: – The applicant is seeking an advance ruling in respect of the following matters: –
Whether supply of pure food such as sweetmeats namkeens, cold drink and other edible items in a sweetshop which also runs a restaurant is a transaction of supply of goods or a supply of service?
What is the nature and rate of tax applicable on sweetshop run from Ground floor and restaurant on First floor and whether the applicant is entitled to claim benefit of Input tax Credit in respect to ready to eat food and to take away of items like sweetmeats, namkeens, Dhokla and other edible items etc?
Held: – The Hon’ble AAR of Uttarakhand vide Advance Ruling No. 09/2018 – 19 dated October 22, 2018 states that the nature of restaurant service is such that it may be treated as the main supply and other supplies combined with such main supply are in the nature of Incidental or ancillary services. Thus, the restaurant services get the character of predominant supply over other supplies. Therefore, such supply shall be treated as supply of service and the sweet shop shall be treated as extension of the restaurant in as much as the said activity covered under schedule II of the act. Further, the applicant come under the purview of “restaurant services” falls under Heading 9963 of GST rates on services under Notification No. 11/2017- Central Rate 28.06.2017, with applicable 5% rate of tax. It is also clarified that applicant cannot avail any credit of input tax paid on goods and services used in the said activity.
Citation:  100 taxmann.com 18 (AAR- UTTARAKHAND)