A dealer runs a sweet shop and a restaurant together. What shall be the rate of tax for him. Please provide the relevant notifications and HSN code also. Will there be different rate of tax for sweet sale and restaurants income.

Reply—When the goods such sweets, namkeens, cold drinks and other edible items are supplied to customers in the restaurant or as takeaways from the restaurant counter and which are being billed under restaurant sales head should fall under 'composite supply with restaurant service being the principal supply, since supply of food in this case, is naturally bundled with the restaurant service. The taxability of all such goods supplied to or through the restaurant will be governed by the principal service i.e. restaurant service and GST rate (5% without ITC) with applicable conditions will also be applicable to all such goods also. Input credit will not be allowed in this case.

If all goods which are supplied to customers through sweetshop counter have no direct or indirect nexus with restaurant service. Anyone can come and purchase any item of any quantity from the counter without visiting the restaurant. The billings of such sales are also done separately. These sales do not satisfy the basic requirement of "composite supply' i.e.' being naturally bundled and supplied in conjunction with each other'. These sales are completely independent of restaurant activity and will continue even when the restaurant is closed, either temporarily or permanently. Hence such sales will be treated as supply of goods with applicable GST rates on the items sold. Input credit will be allowed on such supply.

 Refer decision of AAAR in case of Kundan Mishthan Bhandar dated February 27, 2019 pronounced by APPELLATE AUTHORITY FOR ADVANCE RULING, UTTARAKHAND.