GST Treatment for Bakery Items and Restaurant Services
Bakery outlets can treat pre-made items as goods and made-to-order food as restaurant services if they maintain separate billing records.
- Ruling
- GOA/GAAR/02 of 2025-26/6810 dated 30.03.2026
- Dated
- 30 Mar 2026
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Pre-made bakery items sold without preparation are classified as supply of goods.
- Food prepared at the outlet upon customer order is classified as restaurant service.
- Businesses may use dual tax treatment at one location with separate accounting.
- Separate billing series and records are mandatory for this dual classification.
In short
The company asked the Authority for Advance Ruling (AAR) in Goa if they could split their tax reporting between selling pre-made bakery items and preparing fresh food like pizzas at the same shop. The authority confirmed that these are two different types of supplies under the Goods and Services Tax (GST) law. You can treat them differently, but you must keep your paperwork strictly separated to prove which items were sold as goods and which were provided as a service.
What has changed
How it worked before
Many bakery owners were unsure if selling both pre-packaged items and fresh-cooked food from one counter required them to classify the entire business as a restaurant service.
What has changed
The authority confirmed that the nature of the supply dictates the tax treatment. If you sell a pre-made biscuit, it is a supply of goods; if you assemble a pizza on the spot, it is a restaurant service. You are now explicitly permitted to run both models at once, provided your invoices and accounting clearly distinguish between the two.
Who this affects
Bakery owners, cafe operators, and food retailers who sell both pre-packaged snacks and made-to-order meals.
An example
Imagine a cafe that sells pre-packaged cookies and also makes fresh sandwiches to order. Under this ruling, the cafe can charge GST on the cookies as a supply of goods and charge GST on the sandwiches as a restaurant service. They must use two different billing series to track these sales separately. If they mix the records, they risk tax errors during an audit.
What you should do
If you want to adopt this dual model, ensure your point-of-sale system can issue separate invoices for goods and services. Remember that an advance ruling only binds the company that asked for it and their specific tax officer. You should consult your own tax advisor to see if your specific menu items qualify for this split before changing your billing practices.
If you do nothing
If you assume this ruling applies to you and start splitting your tax categories without proper documentation, your local tax officer may disagree with your classification. If they decide your entire business is a restaurant service, you could face penalties for underpaying tax on your goods. Always verify your specific classification with a professional to avoid unexpected tax demands.
The terms explained
- Supply of goods
- The sale of a physical item where no significant service or preparation is added at the point of sale.
- Restaurant service
- The provision of food or drink where the business performs preparation or cooking at the customer's request.
- Advance ruling
- A formal decision from tax authorities on how GST laws apply to a specific business situation.
The ruling in detail
Authority for Advance Ruling
M/s. Cremeux Bakeries Private Limited
GOA/GAAR/02 of 2025-26/6810 dated 30.03.2026 · Goa
Questions before the authority
- Whether the sale of bakery products such as cakes, pastries, sandwiches, savouries, biscuits, slice cakes, bread, rusk and other ready-made items, which are fully manufactured at the Corlim factory and sold through bakery outlets without any cooking, preparation or processing, constitutes a supply of goods under GST?
- Whether preparation and sale of semi-finished goods such as pizzas at the outlets, wherein pizza base and toppings are supplied from the factory and are blended/prepared at the outlet upon customer order, constitutes restaurant service?
- Whether the Applicant is permitted under GST Law and basis the principles laid out in circular 164-para 3 and para 4 to 1. charge GST as goods for items sold without preparation, and 2. Charge GST as services for items involving preparation/ cooking subject to maintain a separate billing series, accounting records etc.?
Facts
The applicant operates a factory and multiple retail outlets where they sell pre-manufactured bakery items and also prepare certain food items like pizzas upon customer order. They sought clarification on the taxability of these two distinct types of supplies. The applicant specifically asked if they could treat these as separate supplies with different tax treatments at the same premises.
Ruling
| Question | What the authority ruled |
|---|---|
| Sale of pre-manufactured bakery products | Yes, constitutes a supply of goods. Must be sold without any cooking, preparation or processing. |
| Preparation and sale of semi-finished goods like pizzas | Yes, constitutes a restaurant service. Applies to items cooked/prepared/made/blended at restaurant premises upon customer order. |
| Permissibility of dual tax treatment | Yes, permitted. Taxpayer must maintain separate series of tax invoices and clear records for each type of supply. |
The authority ruled that pre-manufactured items sold without further preparation are treated as a supply of goods. Items prepared or blended at the outlet upon customer order are classified as restaurant service. The applicant is permitted to adopt these dual tax treatments provided they maintain separate records and billing series.
Reasoning
The authority relied on Circular No. 164/20/2021-GST, which clarifies that pre-manufactured food items sold without preparation are supplies of goods, while food prepared at the outlet constitutes restaurant service. The ruling confirms that there is no legal impediment to a registered person carrying on both businesses from the same premises. However, the taxpayer is under a **legal obligation** to maintain separate records and invoices to ensure proper tax compliance and input tax credit reversal. The decision emphasizes that the **nature of the supply** determines the taxability.
Provisions relied on
- Section 97(2) of the CGST/GGST Act, 2017
- Section 98 of the CGST/GGST Act, 2017
- Section 2(52) of the CGST Act, 2017
- Section 2(102) of the CGST Act, 2017
- Section 2(30) of the CGST Act, 2017
- Schedule II, Entry 6 of the CGST Act
- Circular No. 164/20/2021-GST dated 06.10.2021
- Notification No. 11/2017-Central Tax (Rate)
For the practitioner
This ruling provides a clear framework for bakery and food retail businesses to bifurcate their operations into goods and services. It validates the **dual tax treatment** model, provided the taxpayer maintains rigorous accounting and separate billing. It does not, however, provide specific HSN codes or tax rates, leaving those to be determined by the classification of the individual goods.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/14-order_goa_aar_cremeuxbakeriespvtltd.pdf
Legibility of the scan, as read: high.
Prepared 11-10-2026.
About Patron Accounting LLP
Patron Accounting LLP is a CA and CS-led accounting and compliance firm that has been working with businesses across India since 2019. We handle the work that keeps a company correct with every department it answers to: day-to-day bookkeeping and accounting, GST registration and returns, income tax filing and assessments, TDS, payroll and PF/ESI, company and LLP incorporation, ROC and MCA compliance, statutory and internal audit, physical stock and inventory audits, trademark and other registrations, and the certificates and reports that banks, buyers and regulators ask for.
Our clients range from a first proprietorship registering for GST to established companies running operations across several states. Much of our work is exactly this: reading what a department has published and telling a business, in plain terms, whether it changes anything for them.
We operate from five offices and serve clients across the rest of India remotely:
- Pune (HQ): RTC Silver, B4-708, Sai Satyam Park, Wagholi, Pune, Maharashtra 412207
- Mumbai: 104, Rajshila Building, 597 J.S.S. Road, Marine Lines, Mumbai 400002
- Delhi: 3rd Floor, B-6/154-155, Sector 5, Rohini, Delhi 110085
- Gurugram: Pioneer Urban Square, B109, Golf Course Ext Road, Sector 62, Gurugram 122098
- Ahmedabad: Phoenix Tower, 1107, near Commerce Six Road, Drive In Road, Navrangpura, Ahmedabad, Gujarat 380009
If anything on this page affects you and you would like somebody to look at your own position, we are glad to help. Call +91 94594 56700, write to sales@patronaccounting.com, or visit patronaccounting.com. The first conversation costs nothing.