CBIC clarifies ice cream parlours need to pay 18% and cloud kitchens 5% GST

As per CBIC, ice creams sold by a parlour or such stores need to pay 18% Goods and Services Tax (GST).

The Central Board of Indirect Taxes and Customs (CBIC) clarified on the issues, in two sets of circulars, raised by trade and industry on rates changes related to 21 goods and services, the decision of which was taken at the 45th GST Council meeting on September 17.

CBIC said that the ice cream parlours already manufactured ice cream and do not have the 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," it said.

It clarified 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, adding this would attract GST at the rate of 18%.

The CBIC also highlighted that services by cloud kitchens or central kitchens will fall under restaurant services.

Services provided by restaurants, cafes and similar eating facilities, including takeaway services, room services and door delivery of food comes under 'Restaurant service'.

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, it said.

The CBIC said services by cloud kitchens or central kitchens will attract five % GST, without ITC (without input tax credit or ITC) benefit.

With regard to fresh and dried fruits and nuts, the CBIC said fresh fruit and nuts would cover those which are meant to be supplied in the state as 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.

At present, fresh nuts (almond, walnut, hazelnut, pistachio etc) are exempt from GST, while dried nuts under these headings attract 5 and 12 percent GST.

Therefore, "exemption from GST to fresh fruits and nuts covers only such products which are not frozen or dried in any manner as stated above or otherwise processed," the CBIC said, adding that supply of dried fruits and nuts will attract five and 12% GST.