Whether supply of food from a different section of business could be considered as supply of goods, hence eligible for ITC? AAR

Facts of the Case:

The applicant is into business of following supplies from a single business premises but having two difference independent sections:

  • Sale of sweetmeats, namkeens and bakery items from the sweet parlour. These items are neither served nor consumed in parlour.
  • Supply of food items and beverages from restaurant, which may either be consumed at the premises or may be taken away.

Applicant submits that these supplies are been made from the place of business having two segregated sections. The two sections are separated not only in respect of billing counters, but applicant maintains separate registers and books of account for two types of businesses and an independent nature of these two sections proves that they are not naturally bundled.

Matter for which ruling was sought:

Whether sale from section of sweetmeats and bakery shop, should be categorized as supply of goods and ITC should be eligible on its purchase?


  • Supply of food and beverages from sweetmeats counter do not have the element of supply of services or as a part of any services. Thus, it shall be categorized as supply of goods and applicant is eligible to avail ITC on their purchases subject to conditions laid down under Chapter V of CGST Act and rules thereof.
  • The most important ingredient in order to check whether supply of food from parlour should not be considered as restaurant services is that, separate books of account are maintained, separate billing counters are available, they have independent presence and occupancy. Hence supplies from parlour will be considered as supply goods and not restaurant services.

Source: [2021] 126 taxmann.com 48 (AAR-WEST BENGAL), AAR

Nakul Sharma, Audit Associate

SW India