All You Need To Know About GST Applicability On Supplies Of Restaurant Service Through E-Commerce Operators

The GST Council in its 45th meeting held on 17th September 2021 recommended notifying “Restaurant Service” under section 9(5) of the CGST Act, 2017. Accordingly, the tax on supplies of restaurant services supplied through e-commerce operators shall be paid by the e-commerce operator.

Here are 7 points you need to know about the applicability of GST on supplies of restaurant services supplied through e-commerce operators:

1. ECOs not required to collect TCS and file GSTR 8

As 'restaurant service' has been notified under section 9(5) of the CGST Act, 2017, the ECO shall be liable to pay GST on restaurant services provided, with effect from 1 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).

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.

2. No mandatory requirement of taking separate registration by ECOs If Already Registered

As ECOs are already registered in accordance with rule 8 (in Form GST-REG 01) of the CGST Rules, 2017 (as a supplier of their own goods or services), 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.

3. ECOs will be liable to pay GST

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

4. Aggregate turnover of person supplying 'restaurant service' through ECOs

The aggregate turnover of person 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.

5. Restaurant service made through ECOs can't be recorded as inward supply of ECOs

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

6. Liability of ECOs to reverse proportional ITC on input goods and services

ECOs provide their own 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 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. ECO would be eligible for ITC as before. 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 utilised for payment of GST on restaurant service supplied through ECO)

7. Invoice To Be Issued By ECO

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

Circular No. 167 / 23 /2021 - GST

Click Here To Read The Circular