GST Update: Clarifications regarding GST on service supplied by restaurants through e-commerce operators

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GST Update: Clarifications regarding GST on service supplied by restaurants through e-commerce operators

Tejasvi

@tejasvi

December 21, 2021

Public Policy

463

The GST Council, in its 45th meeting held in September, 2021 recommended to notify ‚Restaurant Service‛ under S. 9(5) of Central Goods and Services Ta Act, 2019 (CGST Act). Accordingly, tax on supply of restaurant service provided through E-Commerce Operators (ECO) shall be paid by the ECO. In this regard notification No. 17/2021 dated 18.11.2021 has been issued.

In this regard, Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 167/23/2021-GST dated December 17, 2021 clarifying the following aspects:

With effect from January 1, 2022, ECOs will not be required to collect TCS and file GSTR-8 in respect of restaurant services on which it pays tax in terms of S.9(5) of CGST Act. On other goods or services supplied through ECO which are not notified u/s 9(5), ECOs will continue to pay TCS.

The invoice in respect of restaurant service supplied through ECO under S. 9(5) will be issued by ECO.

There is no mandatory requirement of taking separate registration by ECOs for payment of tax on restaurant service under S.9(5) of CGST Act.

ECOs will be liable to pay GST on any restaurant service supplied through them, including by an unregistered person.

The aggregate turnover of person supplying restaurant service through ECOs shall be computed in accordance with S. 2(6) of CGST Act and will include aggregate value of supplies made by the restaurant through ECOs. Accordingly, for threshold consideration or any other purpose in the Act, the person providing restaurant service through ECO shall account such services in his aggregate turnover.

ECOs are not recipient of restaurant service supplied through them. Since these are not input services to ECO, they will not be reported as inward supply (liable to reverse charge).

ECOs will not be required to reverse ITC on account of restaurant services on which it pays GST in terms of S. 9(5) of CGST Act. ECO shall pay the entire GST liability on restaurant service in cash (No ITC could be utilised for payment of GST on restaurant service supplied through ECO)

The ECO may, on services notified under S. 9 (5) of GST Act, including on restaurant service provided through ECO, may continue to pay GST by furnishing details in GSTR 3B, reporting them as outward taxable supplies for the time being. ECO may also, for the time being, furnish details of such supplies of restaurant services under S. 9(5) in Table 7A(1) or Table 4A of GSTR-1, as the case maybe, for accounting purpose. Registered persons supplying restaurant services through ECOs under S. 9(5) will report such supplies of restaurant services made through ECOs in Table of GSTR-1 and Table 3.1 (c) of GSTR-3B, for the time being.

We hope you will find the update useful. Copy of the Circular is attached for your reference.

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Tejasvi