Facts of the Case:

In this case, the applicant was engaged in the business of supplying ice cream through multi-product food retail outlets. The applicant operated outlets where ice cream was either (i) manufactured at a separate unit and supplied to retail counters for sale, or (ii) prepared within the retail outlet itself and supplied to customers. In certain cases, ice cream was sold as a standalone product, while in other cases it was used as an ingredient in prepared food items such as falooda, milkshakes, juices, and other eatables supplied from the outlet.

The applicant sought advance ruling on the classification and applicable GST rate on various modes of supply of ice cream, particularly whether such supply would qualify as “restaurant service” taxable at 5% without input tax credit under Notification No. 11/2017-Central Tax (Rate) or as supply of goods taxable at 5% under Notification No. 9/2025-Central Tax (Rate). The applicant also sought clarity regarding business-to-business (B2B) supplies and the impact of separate GST registration for the manufacturing unit.

Issue:

Whether supply of ice cream through retail outlets qualifies as “restaurant service” or as supply of goods under the GST law. Whether classification changes when ice cream is sold standalone, Prepared at the outlet, Used as an ingredient in other prepared food items. 

Held that:

The Authority for Advance Ruling, Gujarat held that the taxability of ice cream supplied through the applicant’s outlets depends upon the manner and context of supply. Ice cream manufactured outside the retail outlet and sold over the counter without any further processing does not qualify as “restaurant service” and shall be treated as a supply of goods. However, where such ice cream is supplied along with prepared food items or used as an ingredient in items such as falooda, milkshakes, or juices, it assumes the character of a composite supply of restaurant service, the principal supply being prepared food, and is taxable accordingly at 5% without input tax credit under Notification No. 11/2017-Central Tax (Rate).

Further, ice cream prepared within the retail outlet itself and supplied to dine-in or takeaway customers forms part of restaurant operations and qualifies as restaurant service, even if consumed off-premises. However, in cases of business-to-business (B2B) transactions, whether the ice cream is manufactured at the outlet or at a separate unit, the transaction constitutes a supply of goods since no service element is involved.

For supplies not covered under restaurant services, including standalone sale of ice cream as goods, the applicable GST rate is 5% in terms of Sl. No. 141 of Notification No. 9/2025-Central Tax (Rate). Where a separate GST registration is obtained for the manufacturing unit and supplies are made on B2B or B2C basis, such supplies are to be treated purely as supply of goods taxable at 5% under the said notification.

Case Name: In Re: M/s. Mohammed Sajid Mohammed Sharif Kakuwala. dated 19.02.2026