Sweet shops composition

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 November 2018 Sir My Friend is running sweet shop (manufacturing) he is under composition Scheme and he is paying 1 % on Sales
cto is saying you should pay 5 % on sales or 2 % is elible for your business, please suggest me which is eligble for above business

CA Suresh Jain

CA Suresh Jain (Expert)
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07 November 2018 Making the sweets and namkins out of the inputs like flour, sugar, dry fruits, oil, ghee and other inputs is nothing amount an activity amounting to Manufacture. The composition rate applicable, presently, to the manufacturer is 1%.

The entry 6(b) of Schedule II of the CGST act reads as " Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration."
In view of the above, probably the department is asking for payment of 5% composition rate.

It may be noted that the entry mentioned above has been made for the supplies which are "composite in nature" , in your case it is supply of goods and service by restaurant, dhabba, hotel, joints, darshinis, cafe etc. are deemed to be treated a supply of service under entry mentioned above and liable for 5% composition rate. But, the shop in the nature of making and selling the goods over the counter not having any facility of restaurant or hotel or not a part thereof, in my opinion, is liable for 1% GST.
In view of this you need to examine whether the shop fall under the category of a restaurant etc. You may also consider filing an application to Advance ruling Authority of your State