Query 1. Whether Sale of food by a restaurant is a supply of goods or a supply of service?

Query 2. Sir i am having a small shop of samosa, jalebi and gulabjamun previosly I was paying 1 %on turn over now what should I do?

Ans: GST has different slab rates for goods, services and composite supply.

Now, it becomes imperative to determine whether the supplies made by a restaurant will be treated as a supply of goods or supply of services.

In this regard, Point 6(a) of Schedule 2 to the CGST Act provides that a composite supply:

“by way of or part of any service or in any other manner, of food, drinks or any other article for human consumption shall be deemed to be supply of service.”

As per section 2(30) of CGST Act, composite supply means:

“ A supply of two or more taxable goods or services which are naturally bundled.”

Now, consider below 3 situations:

  • Serving of food in a restaurant: This involved two activities, sale of cooked food and serving in a restaurant with a good ambience. Since it involves a natural bundle of two supplies, it will be considered a composite supply and will be deemed to be a supply service.
  • Home delivery of food: This also involved two activities, sale of food and service of home delivery. Since this is also a natural bundle of two supplies, it will be considered a composite supply and will be deemed to be a supply service.
  • Counter sale from restaurant: Counter sale or sale of parcels involves only one element of sale of food. Sale of a Samosa is one such example. There is no element of service involved in this case. Therefore, it would be classified as a supply of goods and GST rules and rates relating of taxability of goods would apply on such transactions.

As per press release dated 05/07/2017 issued by CBEC at below link:

http://www.cbec.gov.in/resources//htdocs-cbec/press-release/brand-name-meaning-gstrates.pdf

CGST rate on unbranded & unpackaged food items is nil.

From the above, it may be construed that unbranded & unpackaged takeaway food items from street food vendor are exempt from GST.

The author is a practising CA and is registered Insolvency Professional. He can be reached at cavinodchaurasia@gmail.com , Mob. +91 9953587496.

Author Bio

Qualification: CA in Practice
Company: VINOD CHAURASIA & ASSOCIATES (CHARTERED ACCOUNTANTS)
Location: NEW DELHI, New Delhi, IN
Member Since: 07 Jun 2017 | Total Posts: 51

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