GST levied on services provided by restaurants via e-commerce operators

The Central Board of Indirect Taxes and Customs (CBIC) stated that e-commerce firms must pay GST on restaurant services.

The GST Council proposed notifying ‘Restaurant Service’ under Section 9(5) of the CGST Act, 2017 during its 45th meeting on September 17, 2021. As a result, the tax on restaurant service supplies provided through e-commerce operators must be paid by the e-commerce operator. Notification No. 17/2021, dated 18.11.2021, has been issued in this regard.

“Certain representations have been received demanding clarification about the modalities of compliance to the GST laws in respect of the delivery of restaurant service through e-commerce operators (ECO),” according to the circular.

Because’restaurant service’ has been notified under section 9(5) of the CGST Act, 2017, the ECO will be required to pay GST on restaurant services offered through ECO beginning January 1, 2022. As a result, ECOs will no longer be obliged to collect TCS and file GSTR 8 for restaurant services on which it pays tax under Section 9. (5).

Other goods or services supplied through ECO that are not notified under Section 9(5) shall continue to be subject to TCS in accordance with Section 52 of the CGST Act, 2017 in the same manner as before.

Because ECOs are already registered in line with Rule 8 (in Form GST-REG 01) of the CGST Rules, 2017 (as a provider of their own products or services), there is no obligation for ECOs to take separate registration to pay tax on restaurant services under Section 9(5) of the CGST Act, 2017.

The circular stated that ECOs will be required to pay GST on any restaurant service provided through them, including those provided by unregistered individuals.

It is specified that the aggregate turnover of a person offering restaurant services via ECOs shall be estimated in accordance with section 2(6) of the CGST Act, 2017, and shall include the aggregate value of supplies made by the restaurant via ECOs. As a result, for the purposes of threshold consideration or any other reason specified in the Act, the person delivering restaurant services through ECO must include such services in his total revenue.

ECOs offer their own services as an electronic platform and a middleman for acquiring inputs/input services for which ECOs receive input tax credit (ITC). For the services it provides, the ECO charges a commission/fee, etc. The ITC is used by ECO to pay GST on services rendered on its own account (say, to a restaurant). Even after ECO is deemed accountable for restaurant service tax, the situation remains unchanged. As before, ECO would be eligible for ITC. As a result, it is clarified that ECO is not obligated to reverse ITC on restaurant services for which it pays GST under section 9(5) of the Act.

It should also be mentioned that while providing restaurant services, ECO must pay the total GST liability in cash (No ITC could be utilised for payment of GST on restaurant service supplied through ECO).

For the time being, registered persons selling restaurant services through ECOs under section 9(5) will record such supplies in Table of GSTR-1 and Table 3.1 (c) of GSTR-3B.

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