The Gujarat Authority for Advance Ruling (AAR) in the case of M/s HRPL Restaurants Pvt. Ltd. Vide Advance Ruling No. GUJ/GAAR/R/2023/08 dated 22.02.2023 Ltd. has ruled that the supply of ice cream from the outlets cannot be classified as the supply of ‘restaurant services’, leviable to GST 18%.

In this case, the applicant is engaged in the restaurant business and operates under two business models namely, company-owned restaurants and franchise restaurants. The applicant has sold their ice cream division. The outlets are broadly of the three types wherein the applicant is supplying food which is prepared and cooked in the restaurant/eatery in addition to supplying the ice creams, which are not prepared/produced by them.

The applicant sought an advance ruling on the issue of whether the supply of ice cream from any of the outlets should be considered as the supply of restaurant services or not.

The Authority of Advance Ruling observed that that the readily available ice creams that are not prepared in the outlets and sold over the counter are supplies of goods. This is similar to supply of ice-cream from ice-cream parlour, leviable to GST at the rate of 18%.

However, an ice cream that is ordered and supplied along with cooked or prepared food through the outlets would assume the character of composite supply, wherein the prepared food being the principal supply and hence qualifying as “restaurant services”. Since the restaurant services attract GST at the rate of 5% which means composite supply of prepared food and ice-cream will affect the same.

The AAR held that ice cream sold by the applicant's outlet would not fall within the ambit of “restaurant service” and its supply of goods, which would attract 18% GST.