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Restaurant manufactures sauces

09 July 2018

Restaurant apart from regular
business. Also manufactures sauce and sale it to other restaurants.
As restaurant are not eligible for ITC.
Then how would we treat gst purchase of raw material. Whether eligible for ITC or not.

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3 Replies

Vinod Babu (24191 Points)
Replied 09 July 2018

Dear sir, what is your gst registration type? Regular or composition scheme.

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Filmy Mast (26 Points)
Replied 09 July 2018

Dear sir,

The restaurant is under regular scheme.
And charging 5% gst

(Guest)

Yes you are right, Itc is not available on restaurant business and rate is 5% without itc but your case is of manufacturing of sauces that will attract hsn 2103 and you are supplying it to another restaurant, so this is different from the restaurant business (hsn 9963) so according to me whatever material you use for its preparation, itc should should be available there on.

"All members of gst council felt that ITC to restaurants is not passed on customers. GST was being charged on existing rates. This was putting additional tax burden on restaurant goers. Thus we decided that restaurant industry will not get the benefit of ITC. GST rates for all restaurants will be 5 per cent from now on. Since they did not pass on the ITC benefit to customers, they will not be eligible for the benefit themselves," Jaitley said addressing press personnel

So the above change is for the benefit of the ultimate consumer and you are selling sauce to another restaurant so itc should be available. I think so