GST on Services supplied by Restaurants through E-Commerce Operators like Swiggy, Zomato, etc.
“Restaurant Service” as defined in Notification No. 11/2017 –Central Tax (Rate) means supply, by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, provided by a restaurant, eating joint, including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied.
Circular No. 164/20/2021 – GST dated 06.10.2021 clarified that “restaurant service‟ includes services provided by Restaurants, Cafes and similar eating facilities including takeaway services, room services and door delivery of food.
Section 9(5) specifies that tax on certain services provided through E-commerce operator (ECO) shall be paid by ECO and all the provisions shall apply to ECO as if he is the supplier liable for paying the tax in relation to the supply of such services.
Notification No. 17/2021-Central Tax (Rate) inserted Clause (iv) of Section 9(5)-
(iv) supply of restaurant service other than the services supplied by restaurant, eating joints etc. located at specified premises.”
Specified premises means premises providing hotel accommodation service having declared tariff of any unit of accommodation above INR 7,500 per unit per day.
In view of above, ECO would be liable to pay tax on restaurant services (other than provided at specified premises) made through it.
Reporting of supplies made u/s 9(5) by ECO
ECO would be required to report supplies made u/s 9(5) in Table 3.1.1(i) of GSTR-3B and shall not include such supplies in Table 3.1(a) of GSTR-3B.
The applicable taxes on such supplies shall be paid by ECO in cash only (No ITC could be utilised for payment of GST on restaurant service supplied through ECO).
Reporting of supplies made u/s 9(5) by Restaurants
Restaurants supplying through ECO shall report such supplies in Table 3.1.1(ii) and shall not include such supplies in Table 3.1(a) of GSTR-3B.
Q.1 What would be the taxable value in case discount has been provided by ECO on restaurant services?
Ans. Any discount provided by ECO will not be deducted from total value charged by restaurants for the purpose of tax to be paid to government. ECO would be required to collect and pay taxes on value charged by restaurant as only tax compliance has been shifted to ECO and all the provisions shall apply as if he is the supplier of such services.
Eg- Value of restaurant services charged by Restaurant – Rs. 100
Discount provided by Swiggy – Rs. 10
Net amount charged- Rs. 90
Swiggy would be required to pay tax on Rs. 100
Certain Clarifications has been made regarding Restaurant Services provided through ECO vide Circular No. 167/23/2020-GST dated 17 December 2021
Q.2 Whether ECO would be required to deduct TCS under Section 52 of the CGST Act, 2017 on restaurant services?
Ans. Explanation to Section 52 specifies that supplies other than services notified under section 9(5) provided by ECO would be covered for TCS provisions. As restaurant services has been notified under Section 9(5) of the CGST Act, 2017, ECO would not be liable to deduct TCS on restaurant services.
Q.3 Whether ECO would be required to deduct TCS under Section 52 of the CGST Act, 2017 on services (not covered under restaurant services) provided by restaurants through them?
Ans. Yes, ECO would be liable to deduct TCS on services (not covered under restaurant services) provided by restaurants through ECO.
Under Section 52 of the CGST Act, 2017, ECO is liable to collect TCS on the net value of taxable supplies made through it other than services covered under Section 9(5).
Eg.- ECO would be required to deduct TCS on additional packing charged by restaurants.
Q.4 Whether ECO would be liable to pay tax on restaurant services provided by unregistered person?
Ans. Yes, ECO would be liable to pay tax on any restaurant services supplied through them included by an unregistered person.
Q.5 Who will raise invoices for restaurant services provided through ECO?
Ans. The invoice in respect of restaurant service supplied through ECO under section 9(5) will be issued by ECO.
Q.6 Whether aggregate value of supplies made by restaurants through ECO would be included in aggregate turnover of restaurants or ECO?
Ans. Aggregate turnover of person supplying restaurant services through ECO shall include services provided through ECO. For purpose of threshold consideration or any other purpose of this Act, Restaurants shall account such services provided through ECO in his aggregate turnover.
Q.7 Whether ECO would be liable to reverse proportional input tax credit on his input goods and services for the reason that input tax credit is not admissible on restaurant service?
Ans. ECO shall not be required to reverse ITC on account of restaurant services on which it pays GST in terms of section 9(5) of the Act.
The ECO charges commission/fee etc. for its services as an electronic platform and an intermediary it provides. The ITC is utilised by ECO for payment of GST on services provided by ECO on its own account (say, to a restaurant). The situation in this regard remains unchanged even after ECO is made liable to pay tax on restaurant service.
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can the e-commerce operator charge the tax by the customer which is to be paid under section 9(5) ?