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NEW DELHI : Unlike food cooked and served at restaurants, ice creams sold at parlours are manufactured items and are therefore taxable at 18%, the finance ministry said in a set of clarifications issued on Wednesday. 

The clarifications are based on decisions taken in the federal tax body, the Goods and Services Tax (GST) Council. These cover eight issues including services of cloud kitchens, satellite launch services, grant of mining rights and services relating to contract manufacture of liquor.  

The finance ministry said that ice cream parlours that sell already manufactured ice cream do not have a character of a restaurant. They do not engage in any form of cooking at any stage, whereas, restaurant service involves the aspect of cooking during the course of providing service. “It is 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. Accordingly, it is clarified that ice cream sold by a parlor or any similar outlet would attract GST at the rate of 18%," the ministry said. Food sold at restaurants are taxed at 5% without input tax credit. 

While the circular provides necessary clarity on GST treatment for ice cream parlours, it might open area of doubts for other such food suppliers who sell already manufactured food items with only a certain ingredient of service, said Abhishek Jain, tax partner at EY. 

The ministry also said that as per GST Council recommendation, the service provided by way of cooking and supply of food, by cloud kitchens/central kitchens are covered under ‘restaurant service’ and attracts 5% GST without ITC. It is clear that takeaway services and door delivery services for consumption of food are considered as restaurant service, the ministry said. 

The ministry also clarified that satellite launch services supplied by Antrix Corp. Ltd to customers outside India constitutes export of service and shall be zero rated. If the service recipient is located in India, the satellite launch services would be taxable.  

Service by way of grant of mining rights during the period 1 July 2017 to 31 December 2018 was taxable at 18%. 

The government also clarified that 28% rate applies on admission to a place having casino or race club or admission to a sporting event like IPL.  

Also, services by way of job work in relation to manufacture of alcoholic liquor for human consumption are not eligible for the GST rate of 5%. Such job work would attract GST at the rate of 18%, the ministry said.


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