Case Law Details
In re Mohammed Sajid Mohammed Sharif Kakuwala (GST AAR Gujarat)
The applicant, an unregistered person under GST, proposed to establish and operate a multi-product food business in Ahmedabad. The business would involve preparation and sale of freshly made food and beverage items including bhajiya, khaman, sandwiches, pizza, juices, falooda, milkshakes, ice cream and other items. The operations would be carried out through the applicant’s own network of retail outlets. All items would be freshly prepared either at the same premises or at a manufacturing unit and supplied through the outlets. Seating facilities would be available, offering both dine-in and takeaway options. The business would function as a composite food service establishment and not as a standalone ice cream parlour.
The applicant proposed to manufacture ice cream at the same premises or a manufacturing unit. The ice cream would either be sold directly through its outlets to customers or used as an ingredient in other preparations such as falooda, juices and milkshakes. In view of GST rate rationalisation post 22.09.2025, the applicant reframed its questions before the Authority for Advance Ruling (AAR), Gujarat.
The first question was whether supply of ice cream manufactured at the same premises or manufacturing unit and sold through outlets (B2C) would qualify as “restaurant services” taxable at 5% without input tax credit (ITC), and whether treatment would differ for B2B transactions. The second question was whether, if not covered as restaurant service, such supply would be classified as supply of goods by an ice cream parlour attracting 5% GST under Notification No. 9/2025-CT (Rate), and what rate would apply if a separate GST registration was obtained for the manufacturing unit supplying on B2B and B2C basis.
The applicant relied on Notification No. 20/2019-CT(R) defining “restaurant service” and Circular No. 164/20/2021-GST clarifying that ice cream parlours selling already manufactured ice cream supply goods and not services. The applicant argued that its business was distinguishable from an ice cream parlour as it involved in-house preparation, dine-in and takeaway services, and comprehensive culinary offerings.
The AAR examined Notification No. 11/2017-CT(R) defining restaurant service as supply, by way of or as part of any service, of food or drink provided by a restaurant for consumption on or away from the premises. Services provided by restaurants fall under SAC 996331. Under Schedule II of the CGST Act, supply of food for consideration is treated as supply of services.
The Authority observed that the applicant would prepare food in its retail outlets and provide dine-in facilities, and therefore the outlets would qualify as restaurants in common parlance. Referring to its earlier ruling in HRPL Restaurants Pvt. Ltd., the AAR noted that ice cream not prepared in retail outlets and sold over the counter without processing constitutes supply of goods. However, if supplied along with cooked food, it becomes part of a composite supply qualifying as restaurant service.
Applying this reasoning, the AAR held:
- Ice cream manufactured outside the retail outlet and sold over the counter would be supply of goods.
- If such ice cream is supplied along with food or used in preparations like falooda, milkshakes or juices, it would qualify as restaurant service.
- Ice cream prepared within the retail outlet and supplied to dine-in or takeaway customers would fall under restaurant services.
- Ice cream supplied in B2B transactions, whether manufactured outside or at the retail outlet, would be treated as supply of goods since no service element is involved.
On the applicable GST rate, the AAR noted that restaurant services attract 5% GST without ITC under Notification No. 11/2017-CT(R). Supply of ice cream as goods attracts 5% GST under Serial No. 141 of Notification No. 9/2025-CT(R). Where a separate GST registration is obtained for the manufacturing unit and supplies are made on B2B and B2C basis, the supply would be treated purely as goods and taxed at 5%.
Accordingly, the AAR ruled that classification depends on the manner of supply—whether as part of restaurant service or as standalone supply of goods—and the GST rate would be 5% in both cases, subject to ITC conditions applicable to restaurant services.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, GUJARAT
M/s Mohammed Sajid Mohammed Sharif Kakuwala, 117, Saiyed Wada, Matani Pole, Astodia, Ahmedabad, Gujarat-380001 [for short — ‘applicant’ I is not registered under GST.
2. The Applicant proposes to establish and operate a multi-product food business in Ahmedabad with a focus on the preparation and sale of diverse range of freshly made food and beverage items. The operations will be carried out through the applicant’s own network of retail outlets located across various areas of the city. The proposed product line will include 13hajiya, Khaman, Sandwiches, Pizza, Juices, Falooda, Milkshakes, Ice cream and other food and beverages. All food and beverage items will be freshly prepared at the applicant’s same premises or manufacturing unit. These items will then be delivered and served directly through the applicant’s own outlets. The ice cream will be made at the same premises or manufacturing unit. After manufacturing, the ice cream will be: –
- Sold directly through the applicant’s own outlets to customers for end- use consumption
- Utilised as a key ingredient in other food and beverage preparations such as falooda, juices, milkshakes etc. which are also freshly prepared and served through the applicant’s own outets.
In premises seating facilities shall be made available for customers, providing the option of dine-in. The business shall operate as a composite food service establishment, not as a standalone ice cream parlour. Thus, there is both dine-in and takeaway.
3. In view of the rationalising of the GST rates post 22.09.2025, the applicant during the course of personal hearing, has reframed their questions as under: –
Q.1 Whether the supply of ice cream, manufactured at the same premises or manufacturing unit and sold through its various outlets (over the counter/B2C), qualifies as ‘restaurant services’, taxable at 5% GST without eligibility of Input Tax Credit (ITC)? Further, whether the tax treatment would differ in cases where such ice cream is supplied in the course of business-to-business (B2B) transactions?
Q.2 If not covered under restaurant services, whether the supply of ice cream from such outlets is liable to be classified as supply of goods by an ice cream parlour, thereby attracting 5% GST with ITC as per Notification No. 9/2025-Central Tax (Rate), dated 17th September 2025,? Further, what would be the applicable GST rate where a separate GST registration is obtained for the ice cream manufacturing unit and supplies are made both on a business-to-business (13213) and business-to-consumer (B2C) basis?
4. The applicant has placed reliance on the following legal framework and clarifications:
(a) Notification No. 20/2019-CT(R) dtd. 30.09.2019 which defines Restaurant Service’ as supply, by way of or as part of any service, of goods, being food or any other– article for human consumption 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.
(b) Reliance is also placed on the clarification regarding ‘Supply of ice cream by ice cream parlours’ issued vide Circular No. 164/20/2021-GST dtd. 06.10.2021. As per the clarification, supply of ice-cream parlour stands on a different footing than restaurant service. Their activity entails supply of ice cream as goods (a manufactured item) and not as a service, even if certain ingredients of service are present. Thus, it has been clarified that where ice cream parlours sell already manufactured ice-cream and do not cook/prepare ice-cream for consumption like a restaurant, it is supply of ice cream as goods and not as a service, even if the supply has certain ingredients of service.
(b) The applicant’s business is distinguishable from ice cream parlours, as it involves preparation, cooking and service of a wide variety of food and beverages. Their operation embodies the characteristics of a restaurant, particularly with:
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- In-house preparation of food items
- Service through dine-in and takeaway
- Comprehensive culinary offerings beyond ice cream
(c) In light of the above and in terms of Notification No. 11/2017-CT (Rate), as amended, it is submitted that the entire supply qualifies as “restaurant services”, taxable at 5% GST without eligibility of Input Tax Credit (ITC)
5. The personal hearing in the matter was held on 04.12.2025 and Shri Mohammed Asfaq Pipadwala, Advocate appeared on behalf of the applicant. They reiterated the submissions mentioned in their application and also submitted that in view of the rationalisation of GST rates post 22.09.2025, they wish to reframe their questions, which has already been reproduced supra.
Discussion and findings
6. At the outset, we would like to state that the provisions of both the CGST Act and the GUST Act are the same, except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the GGST Act.
7. We have considered the submissions made by the applicant in their application for advance ruling as well as the submissions made both oral and written during the course of personal hearing. We have also considered the issue involved, the relevant facts & the applicant’s submission/interpretation of law in respect of question on which the advance ruling is sought.
8. We find that the applicant intends to start a new business, wherein they would be preparing and selling a diverse range of freshly made food and beverage items, which would be carried out through the applicant’s own network of retail outlets located across various areas of the city. Apart from various snacks, juices, milkshakes etc, the applicant would also be supplying ice creams, which would either be made at the same premises or a manufacturing unit and then brought to their retail outlet. The ice cream would be sold directly to the customers or utilised as a key ingredient in other food and beverage preparations such as falooda, juices, milkshakes etc. which arc also freshly prepared and served through the applicant’s own outlets. The retail outlets also have the option of dine-in.
9. In this backdrop, the applicant first question is whether the supply of ice cream manufactured at their retail outlets or a manufacturing unit and sold through its retail outlets, would qualify as ‘restaurant services’ or otherwise. Further, the applicant also wants to know the tax treatment, if such ice cream is supplied in the course of business-to-business (13213) transactions.
10. The definition of restaurant services is mentioned in Notification No. 11/2017-CT(R) dtd. 28.06.2017, as amended. As per the notification, ‘Restaurant service’ means supply, by way of or as part of any service, of goods, being food or any other article for human consumption 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. Further, as per the explanatory notes, services provided by a restaurant fall under SAC 996331 and includes takeaway services, room services and door delivery of food. Also, as per Sr. No. 6 of Schedule II to the CGST Act, 2017 — “supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration” is a composite supply and shall be treated as supply of services.
11 . There is no definition of restaurant in the GST Act, but in common parlance, it is understood as a place where the food is prepared and served to diners, who sit and have their food for a price. We find that the applicant prepares foods in his retail outlets and also provides the option of dine-in facility in his retail outlets. Thus, the retail outlets can be considered as a restaurant. As per the definition of restaurant service laid down in Notification No. 11/2017-CT(R) dtd. 28.06.2017 as amended, we find any supply by way of or as part of any service of goods, being food provided by a restaurant whether for consumption on or away from the premises of the restaurant will fall under Restaurant Services. The appellant aims to supply the ice-cream from his retail outlets, which are either manufactured in his retail outlet or is manufactured in another manufacturing unit.
12. We find that this Authority in Re: HRPL Restaurants Pvt. Ltd. [(2023) 4 Centax 410 (A.A.R. – GST – Guj.)] was dealing with a similar issue. This Authority had held that when ice creams which arc not prepared in the applicant’s retail outlets, when sold over the counter, is supply of goods and not services as no processing is being done. However, when they are supplied along with cooked food, they would assume the character of a composite supply, wherein the prepared food being the principal supply and thus qualifies as restaurant service. Therefore, when the applicant supplies the ice cream, which is prepared in a separate manufacturing unit, over the counter to customers, it would be considered as supply of goods. However, if they are supplied along with cooked food or used in faludas, milk shakes, juices etc., they would qualify as restaurant service. As regards the ice cream prepared in the applicant’s retail outlet and supplied to dine in or retail customers, we feel that the same would partake the character of foods prepared in the restaurant and hence fall under the definition of ‘restaurant services’, even if they are taken away without consuming in the retail outlet. However, when such ice cream is supplied as a part of business-to-business transactions, whether it is manufactured outside and brought to the outlet or manufactured at the retail outlet itself, it shall be treated as a supply of goods as no service is involved.
13. We now move on to the next question of the applicant. We have already elaborated the situations where the supplies would be considered as restaurant services or supply of goods. As per SI. No. 7 (ii) of Notification No. 11/2017-CT(R) dtd. 28.06.2017, as amended, the applicable rate of GST for restaurant services is 5% provided that credit of input tax charged on goods and services used in supplying the service has not been taken. Further, as per S/ 141 of Notification No. 9/2025-Central Tax (Rate), dated 17th September 2025, the applicable GST rate for supply of ice creams would be 5%. In case where a separate GST registration is obtained for the ice cream manufacturing unit and supplies made both on a business-to-business (B2B) and Business to consumer (B2C) basis, we hold that since it is purely a supply of ice cream with no service involved, the same would be considered as supply of goods for which the applicable GST rate would be 5%.
14. In view of the foregoing, we rule as under: –
RULING
Ques 1: Whether the supply of ice cream, manufactured at the same premises or manufacturing unit and sold through its various outlets (over the counter/B2C), qualifies as ‘restaurant services, taxable at 5% GST without eligibility of Input Tax Credit (ITC)? Further, whether the tax treatment would differ in cases where such ice cream is supplied in the course of business-to-business (B2B) transactions?
Ans 1: (i) supply of ice cream manufactured outside the retail outlet when sold over the counter, does not qualify as ‘restaurant service’ and would be considered as supply of goods. However, when they are supplied along with food or used in faludas, milk shakes, juices etc., they would qualify as restaurant service.
(ii) Ice cream prepared in the applicant ‘s retail outlet and supplied to dine in or retail customers would fall under the definition of restaurant services and qualify asas restaurant services.
(iii) Ice cream manufactured as a part of business-to-business transactions, whether it is manufactured outside and brought to the outlet or manufactured at the retail outlet itself shall be treated as a supply of goods.
Ques 2: If not covered under restaurant services, whether the supply of ice cream from such outlets is liable to be classified as supply of goods by an ice cream parlour, thereby attracting 5% GST with ITC as per Notification No. 9/2025-Central Tax (Rate), dated 17th September 2025,? Further, what would be the applicable GST rate where a separate GST registration is obtained for the ice cream manufacturing unit and supplies are made both on a business-to-business (I32B) and business-to-consumer (B2C) basis?
Ans 2: For those services which are not covered under restaurant services as mentioned in Answer No. 1 above, it would be considered as a supply of goods attracting 5% GST as per SI. No. 141 of Notification No. 9/2025-Central Tax (Rate), dated 17th September 2025,. Where a separate GST registration is obtained for the ice cream manufacturing unit and supplies made both on a business-to-business (B2B) and Business to consumer (B2C) basis, it would be considered as supply of goods and the applicable GST rate would be 5% as per SL No. 141 of Notification No. 9/2025-CT(R) dtd. 17.09.2025.
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