GST Council to consider clarifying GST issue on ice cream parlour

The GST Council, expected to meet later this month, is likely to take up the issue related with levy mechanism on ice cream parlour. Ice cream companies have urged for clarification on the applicability of GST at the rate of 18 per cent on parlour.

“The matter is expected to be placed before the GST Council. Based on its recommendation, we will issue clarification,” a senior Finance Ministry official told BusinessLine.The GST Council, in its meeting on September 17, made it clear that ice cream parlor sells already manufactured ice-cream and such supply of ice cream by parlors would attract GST at the rate of 18 per cent.

Also Read : Ice cream parlours asked to pay 18% gst from July 2017

Following this, on October 6, the Finance Ministry issued a clarification saying 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 parlour or any similar outlet would attract GST at the rate of 18 per cent.

Another Finance Ministry official admitted that normally taxation on consumption is not levied with retrospective effect. “Usually, when a notification is issued, it comes into effect from date of publication unless a specific date is mentioned. Here, a clarification has been issued where there is no mention about prospective and retrospective effect. Still, if there is some confusion, that needs to be removed,” he said.

What manufacturers are saying

In a representation, ice cream manufacturers have requested that, “Board (Central Board of Indirect Taxes & Custom) may kindly take steps either to clarify that the GST rate of 18 per cent on supply of ice cream by ice cream parlors would have only prospective effect, and if necessary, to suitably amend relevant notification to apply the rate of 5 per cent GST for the period from July 01, 2017 till the date of the present clarification i.e., October 6, 2021.”

Also Read : Fixed GST at 18% imposed for ice cream in parlours or outside

They submitted that the Covid-19 pandemic has already pushed innumerable such persons out of business. “In such a situation, if the ice-cream parlours are coerced into paying the GST at18 per cent for the past supplies with effect from July 1, 2017, most of them would go bankrupt and would be compelled to close down their businesses as most of such suppliers are small businesses,” the representation said.

People associated with ice cream industry said that GST at the rate of 5 per cent on retail sale was being collected till October 5 and afterwards according to clarification. However, they said that the clarification is giving an impression of applicability of 18 per cent GST from July 1, 2017.