Ice cream sold by parlours to attract GST at 18%

Our Bureau New Delhi | Updated on October 06, 2021

Cloud kitchen, central kitchen to come under restaurant services, says FinMin

The Finance Ministry, on Wednesday, clarified that ice cream sold by parlours or similar outlets, will attract GST at the rate of 18 per cent. It also made it clear that services by cloud kitchen or central kitchen will be covered under restaurant services.

The Ministry has come out with two circulars, clarifying the issues raised by the trade and industry on rate changes related to 21 goods and services. The decision on for rate revision was taken at the meeting of GST Council on September 17 in Lucknow.

On the supply of ice cream by ice cream parlours, it said such places sell the commodity that has already been manufactured and they do not have the character of a restaurant. “Ice cream parlours 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,” it said

Further, it explained that 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. It clarified that where ice cream parlours 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,” it said, while adding that it would attract GST at the rate of 18 per cent.

Cloud kitchen

Taking cue from 2017 notification, the Ministry said that ‘restaurant service’ includes services provided by restaurants, cafes, including takeaway services, room services and door delivery of food.

Therefore, it is clear that takeaway services and door delivery services are also considered 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 under restaurant service. “This would thus cover services provided by cloud kitchens/central kitchens,” said the Ministry, while adding that these will attract GST at the rate of 5 per cent, but will not get ITC.

At present, fresh nuts (almond, walnut, hazelnut, pistachio) are exempted from GST, while dried nuts under these headings attract GST at 5 and 12 per cent. The Ministry said that fresh fruit and nuts would cover fruit and nuts that are meant to be supplied in the State where they are plucked.

They continue to be fresh even if chilled. However, fruit and nuts do not qualify as fresh once frozen (cooked or otherwise), or intentionally dried to dehydrate, including through sun drying, evaporation or freezing, for supply as dried fruits or nuts.

Therefore, “exemption from GST to fresh fruits and nuts covers only such products that are not frozen or dried in any manner as stated above or otherwise processed,” said the Ministry, while adding that the supply of dried fruits and nuts attract GST at the rate of 5 and 12 per cent.

Published on October 06, 2021

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