The CBIC has issued clarifications with reference to GST rates of certain services on the basis of recommendations of the GST Council in its 45th meeting held on 17th September, 2021 through its Circular No. 164/20/2021-GST dt. 06th October 2021:
Services by cloud kitchens/central kitchens:
The word “restaurant service‟ is defined in Notification No. 11/2017 –CTR as below: -“Restaurant service‟ means supply, by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied.
The explanatory notes to the classification of service state that “restaurant service‟ includes services provided by Restaurants, Cafes and similar eating facilities including takeaway services, room services and door delivery of food. Therefore, it is clear that takeaway services and door delivery services for consumption of food are also considered as restaurant service and, accordingly, service by an entity, by way of cooking and supply of food, even if it is exclusively by way of takeaway or door delivery or through or from any restaurant would be covered by restaurant service. This would thus cover services provided by cloud kitchens/central kitchens.
Accordingly, as recommended by the Council, it is clarified that service provided by way of cooking and supply of food, by cloud kitchens/central kitchens are covered under “restaurant service‟, as defined in notification No. 11/2017-Central Tax (Rate) and attract 5% GST [ without ITC].
Supply of ice cream by ice cream parlors:
Ice cream parlors sell already manufactured ice-cream and they do not have a character of a restaurant. Ice-cream parlors do not engage in any form of cooking at any stage, whereas, restaurant service involves the aspect of cooking/preparing during the course of providing service. Thus, supply of ice-cream parlor stands on a different footing than restaurant service. Their activity entails supply of ice cream as goods (a manufactured item) and not as a service, even if certain ingredients of service are present.
Accordingly, as recommended by the Council, it is clarified that where ice cream parlors sell already manufactured ice-cream and do not cook/prepare ice-cream for consumption like a restaurant, it is supply of ice cream as goods and not as a service, even if the supply has certain ingredients of service.
Accordingly, it is clarified that ice cream sold by a parlor or any similar outlet would attract GST at the rate of 18%.