In this sweltering heat, who can resist a scoop of ice-cream? Interestingly, the issue of whether serving a scoop of ice-cream would be a supply of services or goods or whether it would be a composite supply, was recently examined by the Authority of Advance Ruling (AAR), Maharashtra bench. Based on the facts of the case, the AAR agreed that even serving scoops of ice-cream did not contain any service element and was a supply of goods. It would attract GST at 18% and the applicant would be able to avail input tax credit (in simple terms it refers to credit that is available for taxes paid on its own purchases or expenditure). Arihant Enterprises, under a franchisee model, sold ice-creams in retail packs (party packs or tubs, typically of 500 grams) and also by way of ice-cream scoops. Sale of retail packs contributed 75% to the company’s turnover.
The company explained that even when it served scoops of ice-cream, the only activity was transfer of goods (ice-cream) to a cone or a cup. The service element involved was minimal. Only some of its outlets provided a few seats, but this was to benefit senior citizens and mothers accompanied by toddlers. Customers were free to eat the scoops outside the outlets. On the other hand, a restaurant, canteen or eating joint, refers to an establishment where people meet to eat and drink at the same place. There is a larger element of service involved, it added. The AAR agreed that the company was a mere re-seller of ice-cream and was engaged in the supply of goods (ice-cream, whether by way of retail packs or scoops).