Last updated: December 2nd, 2024 11:46 PM

GST on Services Supplied by Restaurants through e-commerce Operators - CBIC Clarification

The GST Council in its 45th meeting decided that E-commerce operators need to pay GST on restaurant service supplied through them; tax to be charged at the point of delivery. Certain representations have been received requesting clarification regarding modalities of compliance to the GST laws in respect of the supply of restaurant service through e-commerce operators (ECO). Considering this, The Central Board of Indirect Taxes and Customs (CBIC) vide Circular No. 167 / 23 /2021 – GST dated 17^th December 2021 issued Clarification regarding GST on service supplied by restaurants through e-commerce operators. 

Synopsis of CBIC Circular

With this circular, CBIC issued a clarification on various issues relating to shifting in GST liability from restaurant to E-commerce operators (ECO).

• From January 1st, 2022, the tax on supplies of restaurant services supplied through e-commerce operators (ECOs) shall be paid by ECOs.
• In this regard, the CBIC has clarified several points such as ITC reversal by e-commerce operators (ECOs)s, TCS requirement, compliance requirement, etc.

Food Delivery Platforms come under GST - 45th GST Council Meeting

As per the 45^th GST council meet decision, E-Commerce Operators are being made liable to pay tax on the following services provided through them:

• Transport of passengers, by any type of motor vehicles through it with effect from 1st January 2022
• Restaurant services provided through it with some exceptions with effect from  1st January 2022]

Regarding E-Commerce Operators and gig offices, it has been decided that since the place where food is delivered will be the point where tax is collected, the E-Commerce operator who will be collecting tax will pay up the GST. The GST council now announced that there is no new tax. Previously the tax was paid by restaurants but now aggregators like Zomato and Swiggy will pay the tax.

Clarification on TCS requirement for E-Commerce Operators

CBIC issued the following clarification regarding the collection of Tax Collected at Source (TCS) by ECO in compliance with section 52 of the CGST Act, 2017: The ‘restaurant service’ has been notified under section 9(5) of the CGST Act, 2017, the E-Commerce Operators shall be liable to pay GST on restaurant services provided, with effect from the 1st January 2022, through ECO.

• Accordingly, the ECOs will no longer be required to collect TCS and file GSTR 8 in respect of restaurant services on which it pays tax in terms of section 9(5) of the CGST Act, 2017.
• On other goods or services supplied through ECO, which are not notified u/s 9(5), ECOs will continue to pay TCS in terms of section 52 of CGST Act, 2017 in the same manner at present.

Clarification on ECO Registration for Payment of tax on Restaurant service

The Central Board of Indirect Taxes and Customs (CBIC) is now clarified there would be no mandatory requirement of taking separate registration by ECOs for payment of tax on restaurant service under section 9(5) of the CGST Act, 2017 because ECOs are already registered following rule 8 (in Form GST-REG 01) of the CGST Rules, 2017 (as a supplier of their goods or services).

Clarification on Aggregate Turnover of the person supplying ‘restaurant service’ through ECOs

CBIC clarified that the aggregate turnover of persons supplying restaurant service through ECOs shall be computed as defined in section 2(6) of the CGST Act, 2017, and shall include the aggregate value of supplies made by the restaurant through ECOs. Accordingly, for threshold consideration or any other purpose in the CGST Act, the person providing restaurant service through   ECO   shall account such services in his aggregate turnover. To know more about section 9(5) of the CGST Act, 2017, refer to the following document.

Clarification on Input Tax Credi (ITC) reversal by E-Commerce Operators

E-Commerce Operators provide their services as an electronic platform and an intermediary for which it would acquire inputs/input services on which ECOs avail input tax credit (ITC).  The ECO charges commission/fee etc. for the services it provides. The ITC is utilized by ECO for payment of GST on services provided by ECO on its account. The situation in this regard remains unchanged even after ECO is made liable to pay tax on restaurant service. ECO would be eligible to ITC as before.

• CBIC clarified that 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.
• It may also be noted that on restaurant service, ECO shall pay the entire GST liability in cash  (No ITC could be utilized for payment of GST on restaurant service supplied through ECO)

Payment of Tax for the supply of goods other than ‘restaurant service’ through ECOs

ECO is required to pay GST on services notified under section9(5), besides the services/other supplies made on his account. On any supply that is not notified under section 9(5), that is supplied by a person through ECO, the liability to pay GST continues on such supplier and ECO shall continue to pay TCS on such supplies. Thus, present dispensation continues for ECO, on supplies other than restaurant services. On such supplies (other than restaurant services made through ECO) GST will continue to be billed, collected, and deposited in the same manner as is being done at present. ECO will deposit TCS on such supplies.

Reporting of Restaurant services, value, and tax liability in the GST Return

Several other services are already notified under section 9(5). In respect of such services, ECO operators are presently paying GST by furnishing details in GSTR 3B.

• The ECO may, on services notified under section 9 (5) of the CGST Act, 2017, including on restaurant service provided through ECO, may continue to pay GST by furnishing the details in GSTR 3B, reporting them as outward taxable supplies for the time being.
• Besides, ECO may also, for the time being, furnish the details of such supplies of restaurant services under section 9(5) in Table 7A(1) or Table 4A of GSTR-1, as the case may be, for accounting purposes.
• Registered persons supplying restaurant services through ECOs under section 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.

Other Clarification on the shift in GST liability from Restaurant to Food Aggregators

• ECOs will be liable to pay GST on any restaurant service supplied through them including by an unregistered business entity/ unregistered persons.
• The supplies of restaurant service made through ECOs  will not be recorded as an inward supply of ECOs (liable to reverse charge) in GSTR 3B
• ECO can’t utilize its Input Tax Credit to pay tax concerning ‘restaurant service’ supplied through the ECO. The liability of payment of tax by ECO as per section 9(5) shall be discharged in cash.