In re Riddhi Enterprise (GST AAAR Gujarat)
In Riddhi Enterprise (GST AAAR Gujarat), the Gujarat Appellate Authority for Advance Ruling (AAAR) examined whether pre-packaged food sold over the counter qualifies as “restaurant services” under GST law. The appellant, engaged in the restaurant business, prepared and sold food items for dine-in and takeaway but also sold pre-packaged food purchased from external vendors. They contended that all sales, including pre-packaged items, should be classified under “restaurant services” with 5% GST and no input tax credit (ITC). However, the Gujarat Authority for Advance Ruling (GAAR) ruled that only food prepared in the restaurant qualifies as restaurant service, while pre-packaged food sold over the counter is a supply of goods, attracting applicable GST with ITC benefits.
Upon appeal, the AAAR upheld GAAR’s ruling, rejecting Riddhi Enterprise’s argument. The ruling referenced previous cases, such as Kundan Mishthan Bhandar and Gangaur Sweets, but found them inapplicable due to factual differences. The AAAR concluded that pre-packaged food purchased from the market and sold directly is distinct from restaurant service and should be taxed accordingly. The decision clarifies GST applicability for restaurants engaged in both food preparation and retail sales, distinguishing between services and goods for tax purposes.
