At the upcoming GST Council meeting, a crucial decision on this matter can be made. Confusion emerged as a result of the Finance Ministry’s cleaning.
Ice cream parlours may be excused from paying retroactive GST; exemption from paying tax on previous bills is now feasible since collecting 13 percent GST on past sales is challenging.
Ice cream shops may be exempt from retroactive GST. According to insiders, a crucial decision on this matter might be made at the GST Council’s next meeting. Confusion emerged as a result of the Finance Ministry’s cleaning. The Group of Ministers supports an exception for the parlour. The adoption of the higher GST rate in 2017 concerned parlour proprietors.
Following the Finance Ministry’s statement on October 6, ice cream parlour owners around the nation were concerned that the tax authorities would not provide them with summons to pay tax at the retroactive rate, i.e., 18 percent. According to CNBC Awaaz, the Group of Ministers formed on the GST rate has considered the problem and can suggest that GST be paid from the day the notice is released. In other words, they will not be required to pay GST at the retroactive rate.
Until until, all ice cream parlours considered themselves restaurants and charged a 5% mark-up on ice cream without claiming the input tax credit as a service charge. The Finance Ministry, on the other hand, confirmed that selling ice cream anywhere in the country will henceforth be subject to an 18% tax.
Following this, there was a crisis at the ice cream shop since the tax officer should not have issued a notice to pay GST at the rate of 13%, which is the difference in tax from 2017 forward. Ice cream parlours, on the other hand, will no longer be forced to pay retroactive tax. Its decision might be made at the next GST Council meeting.
Let us remind you that ice cream parlours that sell pre-made ice cream are not considered restaurants by the Finance Ministry. They do not engage in any sort of cooking at any point, whereas the restaurant is engaged in culinary activity while delivering service.
Ice cream parlours, unlike restaurants, sell fully created ice cream and do not cook or make ice cream for consumption. Even if some of the ingredients in the supply are provided, ice cream is given as a commodity rather than a service. Because ice cream served in a parlour or similar establishment will be subject to 18% GST. Food sold in restaurants is taxed at a rate of 5%, with no input tax credit.