In a case that has a significant impact on restaurant channels and bakery companies as well as on several industries based on the classification of food services under the goods and services tax, the High Court of Bombay has declared that for the moment no coercive action will be initiated against Mad over donuts by the tax authorities of the contested classification.
The High Court of Bombay also granted to the petitioner – Mad Over Donuts (Himesh Foods), the freedom to approach the bench in the event that recovery actions are taken by the Department of TPS. During its recent hearing, the court also ordered the tax department to submit its response by March 17. The case is scheduled for a new hearing on March 24.
The case concerns opinions for the TPS sent to Himesh Foods as well as several other donuts and bakery channels looking for 18% TPS for sale of donuts and bakery items. The challenge has appeared because these channels maintain that the GST must be paid 5% because the sale of these products is restoration of catering services.
The case is heard by a bench including the judge BP COLABAWALLA and FP POONIWALLA of the judge on the question of whether the supply of donuts is the field of restaurants under accounting code (bag) 9963 or should be classified as a bakery product subject to separate tax treatment within the framework of the tax on goods and services (GST).
Representing the petitioner, Mad Over Donuts (Himesh Foods), Abhishek A Rastogi argued that the supply of food or other edible items is considered to be a composite offer of services under the Central GST Act. He also pointed out that the relevant notifications on GST levels explicitly define the catering services to include food provided in restaurants, the consumption of joints, damage and canteens, whether for consumption on places or to take away. He also argued that the official circular supports this interpretation by confirming that take -out services should be classified as services and taxed at 5%.
The High Court of Bombay also examines another crucial aspect in the case of the case on
Question of multiplicity of procedures in different territorial jurisdictions. The bench examined whether a centralized opinion of presentation cases (SCN) issued by the Directorate General of TPS Intelligence (DGGI) is sufficient or if separate opinions must be issued for each TPS registration.
