In its next GST Council meeting later this month the Council is likely to consider issues related to levy of GST on ice cream parlors. It will also clarify on confusions related to applicability of GST and date of its imposition at 18 percent; earlier ice cream parlor owners had sent a petition to the Finance Ministry, seeking clarity. A senior official from the finance ministry said that “The matter is expected to be placed before the GST council. Based on its recommendation, we will issue clarification”. The GST council headed by Finance Minister Nirmala Sitharaman in a meeting in Lucknow on September 17 took several decisions. One was regarding the differentiation between restaurants and ice cream parlors, this decision made clear that ice cream parlors already manufacture ice cream and supply of ice cream by parlors would attract GST at the rate of 18 percent.
Till October 5, ice cream parlors were charging five percent from customers on their retail sales as from July 2017, there was no differentiation between ice cream parlors and restaurants, so the parlors or outlets in similar businesses started charging only Five percent tax.
By late October, ice cream parlor owners started receiving summons with a one-day notice from GST authorities in several states. Alarm bells started ringing in the ice cream industry as they were asked to furnish details on sales made with Five percent from July 2017 onwards and informed by the GST council that decision of 18 percent GST on ice cream will have retrospective effect from July 2017.
In November ice cream parlor owners had sent a petition to the Finance Ministry, seeking clarity, after receiving tax summons from GST authorities. Ice cream parlor owners and the ice cream association seem concerned that the retrospective effect of the new GST slab will make their survival in business difficult as the entire burden of retrospective tax will lie with the parlor owners who are already struggling in the pandemic.