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Food and beverages sold over the counter are considered supplies of goods rather than restaurant services, asserts AAR.

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Food and drinks that are readily available, not produced in a restaurant, and sold over the counter are supplied of products subject to GST and do not meet the definition of “restaurant services,” according to the Gujarat Authority of Advance Ruling (AAR).

The decision of the Appellate Authority of Advance Ruling, Uttrakhand, in the case of M/s Kundan Mishthan, stated that sales of sweets, namkeens, cold drinks, and other edible items from sweet shop counters will be treated as supplies of goods with applicable GST rates of the items being sold, and input credit will be allowed on supplies, was cited by the two-member bench made up of Amit Kumar Mishra and Milind Kavatkar.

The applicant is in the restaurant industry, which provides a range of food items, including food and beverages cooked inside the restaurant as well as easily accessible food and beverages served over the counter. The applicants are independent eateries that solely offer food and drinks; they are not hotels.

The applicant has stated that there are a common billing counter, software, and books of account for all the orders. For the readily available food and beverages sold over the counter and the food and beverages cooked in the restaurant, there is no distinct billing system.

The applicant requested an early decision on the question of whether immediately available food and beverages (not made in the restaurant) sold over the counter by the applicant to the customer, whether consumed in the restaurant or by means of takeout, constitute “restaurant services.”

The AAR has determined that the readily available food items (not those prepared or cooked in the restaurant) that are sold over the counter by the applicant to the customer, whether consumed in the restaurant or by way of takeaway, do not qualify as “restaurant services” but rather fall under the category of “supply of goods,” which is subject to the applicable rate of GST.

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