Procrastination: What, why & how to overcome

Background:

The 45th GST Council meeting was held on 17th September 2021 at Lucknow under the chairmanship of the finance minister. The GST Council has made several recommendations relating to changes in GST rates on supply of goods and services and other changes related to GST law and procedure.  

One such change in the law and procedure, impacted the business of Restaurants operating through the E-commerce operators such as Swiggy, Zomato etc.,

The changes are being notified through the Notification No 17/2021-Central Tax (Rate) dated 18.11.2021 and the same are made effective from 01st January 2022.

Further, CBIC has also issued a Circular vide No 167/23/2021-GST dated 17th December, 2021 to clarify certain aspects of the aforesaid changes which have been implemented w.e.f. 01st January 2022.

Through this article, author wishes to emphasize on the GST return disclosures for the Restaurants who supply through the E-commerce Aggregators like Swiggy, Zomato etc.,.

Before understanding the GST return disclosures for the Restaurants, let’s try to understand the taxability of the Restaurant services supplied through the ECO’s.

Discussion on the Important terms:

• “Restaurant service‟ means supply, by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied.  [Defined under the explanation provided under Notification 11/2017-CT(Rate)]
• “Specified premise” means premises providing hotel accommodation services having declared tariff of any unit of accommodation above seven thousand five hundred rupees per unit per day or equivalent.
• “Declared tariff” means charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit.
• “Electronic commerce” means the supply of goods or services or both, including digital products over digital or electronic network; [ Sec 2(44) of CGST Act]
• “Electronic commerce operator” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce; [Sec 2(45) of CGST Act]

Note: In simple, Restaurants located at a premises, where the declared tariff for any unit per day for hotel accommodation exceeds Rs. 7,500 shall charge GST @18% on the restaurant services instead of 5% and such premises are called ‘specified premises under GST.

Further, supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration, shall be treated as a supply of services. [Para 6 (b) of the Schedule II of the CGST Act 2017]

Taxability of the Restaurant services:   

Till 31.12.2021:

• Supplier of Restaurant services other than at specified premises, through ECO- Restaurant.
• GST Invoice: GST registered Restaurants are liable to issue the Tax invoice to the customers for the services provided through the ECO’s and deposit the GST with the Govt.
• Tax Collection at Source: ECO’s (like Zomato, Swiggy) shall deduct TCS @1% [CGST-0.5% + SGST-0.5%] on the net value of the taxable supplies made through them by the Restaurants and remit the TCS collected by filing GSTR-8.
• GST Rate- 5% on the Restaurant services supplied other than at specified premises [The credit of input tax charged on the goods and services used in supplying the service has not been taken]

From 01.01.2022:

• Deemed Supplier of Restaurant servicesother than at specified premises, through ECO- ECO (i.e., Swiggy, Zomato, etc.,).
• GST Invoice: ECO(i.e., Swiggy, Zomato, etc.,) is liable to issue the Tax invoice to the customers for the Restaurant services provided through them and deposit the GST with the Govt. Reason being ‘Restaurant services other than at specified premises’ supplied through ECO, is notified under Section 9(5) of CGST Act 2017, which makes the ECO the deemed supplier of services and all the compliances with respect to such supplies (like issuance of Invoice, payment of tax, etc.,) shall be complied by such ECO’s.
•  Tax Collection at Source: Not applicable, as the restaurant services other than at specified premises is notified under Section 9(5) of the CGST Act 2017. Wherever Section 9(5) applies, TCS provision under GST do not apply. 
• GST Rate- 5% on the Restaurant services. ECO’s shall discharge the GST liability arising on the Restaurant services using the electronic cash ledger only. The same is clarified vide Circular No 167/23/2021-GST.

GST Return disclosures for Restaurants

Before 01st January 2022:

GSTR-1:

GSTR-3B:

All the supplies, i.e., Online sales and Offline sales shall be shown under Table 3.1.(a) of GSTR-3B and taxes shall be discharged.

From 01st January 2022 to 31st December 2023:

GSTR-1:

GSTR-3B:

*Note: Registered persons supplying restaurant services through ECOs under section 9(5) will report such supplies of restaurant services made through ECOs in Table 8 of GSTR-1 and Table 3.1(c) of GSTR-3B, for the time being. [Clarified vide Circular No 167/23/2021-GST dated 17th December 2021]

From 01st January 2024: 

GSTR-1

GSTR-3B:

Suggestions or feedback can be sent to thulasiram@hnaindia.com 

The author extends special thanks to CA Roopa Nayak roopa@hnaindia.com for vetting this article.