In re Pioneer Bakers (GST AAAR Odisha)
In the case of In re Pioneer Bakers (GST AAAR Odisha), the Odisha Appellate Authority for Advance Ruling (AAAR) addressed the GST implications of various supplies made by the bakery chain. Pioneer Bakers operates outlets offering a variety of food items, including cakes, pastries, handmade chocolates, and beverages, alongside services such as air-conditioned dining and customization. The AAAR ruled that such operations qualify as a “composite supply,” wherein the principal supply is food, and the accompanying services align with the definition of “restaurant service” under GST law. This classification attracts a 5% GST rate, excluding input tax credit (ITC).
The authority distinguished between services and the sale of bought-out goods such as birthday caps and decorative items. These items, sold without any additional processing, are treated as a supply of goods and taxed at rates applicable under Notification No. 1/2017-Central Tax (Rate). Furthermore, handmade chocolates processed at the bakery and customized per customer preferences also fall under “composite supply” when consumed on the premises.
The AAAR addressed specific questions raised by Pioneer Bakers, confirming that its food and related services are taxable under the “restaurant service” category. However, certain items bundled with cakes, such as decorative goods, do not qualify as composite supply. The authority also clarified that the bakery is ineligible for the GST composition scheme as it manufactures ice cream, a restricted activity under the scheme.
