E-Commerce Operators (ECO) liable to pay GST on Restaurant Services W.E.F 01-01-2022:

 

The GST Council in its 45th meeting held on 17th September, 2021 recommended to notify Restaurant Service under section 9(5) of the CGST Act, 2017. Accordingly, to effectuate this recommendation, *Notification No. 17/2021 (CTR) dated 18.11.2021 has been issued and now a separate clarification vide  Circular No. 167 / 23 /2021 – GST, dated: 17-12-2021, also has been issued to the extent that that the e-commerce operators (ECO) are liable to pay GST on restaurant services.

These clarifications issued well ahead of the date of implementation will go a long way in a correct understanding of the legislative requirements and compliance of the same in days to come.  This is a welcome move for proper implementation of the law.

The scenario is 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 the 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.

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.

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. 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.

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.

ECOs provide their own services as an electronic platform and an intermediary  for which it would acquire inputs/input service 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 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 to ITC as before.

Accordingly, 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.