9911796707
TMI Blog2019 (10) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... fied as a composite supply defined under section 2(30) of the CGST Act, 2017 and section 2(30) of the KGST Act, 2017, wherein the principal supply is the supply of goods namely the ice cream and other products while the services supplied namely the air conditioned place, place to sit, the service of mixing various ice creams being naturally bundled in the ordinary course of business? b) Whether the said supply will be covered under serial no. 6(b) of schedule II of CGST Act and serial no. 6(b) of Schedule II of Karnataka GST Act? Serial no.6(b) deems the following composite supply as supply of service; c) Whether the said supply will be classified under chapter "9963" and chargeable to 5% GST rate in accordance with serial no. (ii) of Notification No. 46/2017 dated 14.11.2017 - Central Tax (Rate) read with serial no. 7(iv) of Notification No.11/2017 dated 28.06.2017 and similar notification under KGST Act? 3. The applicant furnishes some facts relevant to the stated activity: a. The applicant states that they are a listed company engaged in the business of producing and marketing of dairy products viz., Milk, Curd, Butter, Paneer, Ghee, Skimmed Milk Powder, Dairy Whitener, P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not subject to MRP since they are not sold in retail package form. In fact the applicant themselves sell ice cream through their other brand "ARUN" in a packed condition at MRP price through their franchisee outlets. h. In addition to ice creams, the applicant also serves / supplies chocolates and ice cream cakes at IBACO outlets. The said cakes and chocolates are not pre-packed and hence not covered by Legal Metrology Act. i. There are 15 varieties of chocolate offerings at IBACO outlets. The packages of chocolates are custom made to the choice and count of customer. j. Cakes at IBACO outlets are of two types, cake based ice cream cake and pizza based ice cream cakes. The same shall have cake or pizza as a base and standard mix of ice creams on it. k. Further, the varieties of ice creams artisan cakes are made available such as Butterscotch, Almond Amore, Choco Vanilla Chateau, Mango Litchi Medley, Choco-Vanilla delight, Mango Italian Fiesta, Choco-Caramel Waltz, etc. 4. The business model of IBACO, as per the submission of the applicant, is as under: To demonstrate the flow of process on sale of an ice cream or ice cream cakes and chocolates, the applicant summarises th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ambience and overall different experience vis-a vis compared to a normal ice cream parlour. Similar to the aforesaid process the ice cream cakes are also sold to customers in a similar manner, where the customer provides various customizations of combination of ice creams. 5. The applicant makes the following submissions in relation to the questions on hand: 5.1 The supply made by IBACO is a composite supply: 5.1.1. The applicant submits that the consideration charged to customer for ice cream is a consolidated charge for following supplies:- a. Ice cream or a mix of ice creams b. Service charges for mixing the toppings with ice cream as desired by customer c. Service charges for serving the ice cream in cup or cone or ice cream bar as desired by the customer d. air conditioned seating facility provided to customers e. Drinking water facility, provision of tissue papers and dustbin. Similarly the consideration charged for chocolates, ice cream cakes and pizza cakes at IBACO outlets also includes the service charges, air-conditioned seating facility and provision of drinking water and tissue papers and dustbin. 5.1.2. Thus, two or more goods and/or services are combin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in a composite supply where supply of food and supply of services are naturally bundled, irrespective of its principal supply, the said composite supply shall be deemed to be a supply of services. Hence, though the principal supply of supplies of IBACO outlets is ice cream or cake, the same shall be deemed to be supply of services. The applicant has referred to an article published in ICAI publication in support of this contention. Further, the applicant states that the above contention also includes the take-away, home delivery, etc. 5.3 Regarding the classification of composite supply made by IBACO, the applicant states that for the above mentioned services as derived, GST rate of 18% is applicable as per entry no. 7(iv) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 and with effect from 15th November, 2017, Entry No.7 (iv) of the above Notification is amended vide entry No. (ii) of Notification No. 46/2017 dated 14.11.2017 - Central Tax (Rate) dated 14.11.2017 prescribing a tax rate of 2.5% provided that credit of input tax charged on goods and services used in supplying the service has not been taken. Therefore, with effect from 15th November, 2017, the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsumption or any drink, where supply or service is for a consideration, then such composite supply shall be treated as a supply of services. Since the applicant is supplying ice creams, which are items for human consumption, by way of or as part of any service or in any other manner, the composite supply has to be treated as a supply of services. 6.4. Entry No.7 (i) of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 46/2017 - Central Tax (Rate) dated 14.11.2017 reads as under: (3) (4) (5) (i) Supply, by way of or part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or drink, where such supply or service is for cash, deferred payment or other valuable consideration, 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, other than those located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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