• Notification Date: 04-01-2023
  • Notification No: N/A

AAR Gujarat: All Restaurant Services to attract 5 Percent GST

A recent ruling declared by the GST Authority for Advance Rulings’ (AAR) Gujarat unit stated that five percent rate of GST will be applicable for all restaurant services including dining in, takeaways and even doorstep deliveries by stand-alone restaurants. 
In the report, the authority stated That irrespective of whether customers of Riddhi Enterprises (the applicant, which is a stand-alone restaurant) consumed food & beverages prepared and supplied to them in the restaurant itself or by way of a takeaway, it would qualify as a ‘restaurant service’. Hence, this service attracts GST at 5 per cent without input tax credit. 
Regarding the over-the-counter supply of ‘readily available’ food and beverages which are not prepared by the eateries, the AAR bench ruled that these products will not come under the ‘restaurant service’ category and the GST rate will be applicable individually on these items. 

The bench referred to a GST Council meeting held in 2017 while making the decisions. It also drew references from a recent circular issued by the Central Board of Indirect Taxes and Customs (CBIC) in October. According to these circulars, takeaway and doorstep delivery services fall within the range of “restaurant services”. 

The ruling further clarifies the issues regarding the matter. Chintan Vasa, chartered accountant at Aurtus Consulting who represented the matter before the bench said that challenges will arise for those restaurants who were also treating over-the-counter supply of ‘readily available’ items within the ambit of ‘restaurant service’. He added that in case of ice-cream parlours levying 5 percent GST, pursuant to a GST Council meeting, the CBIC in August 2022 clarified that while a rate of 18 per cent would apply, past cases would be treated as fully paid to avoid unnecessary litigation. The GST Council must recommend a similar clarification for restaurants.