GST on Restaurant Services

[Kaustubh Karandikar]

XYZ is running a standalone restaurant (Non – AC). He is serving food in the restaurant as well as through E – Commerce operator such as Zomato etc. Can XYZ claim the threshold exemption of ₹ 20 Lacs?

[KASTURI SETHI]

In my view, NO.

[Shilpi Jain]

Compulsory registration under section 24 is applicable only when the supply is made through an e commerce operator who is required to collect tax at source under section 52. In this case if the E-Commerce operator is not required to collect tax at source then the restaurant can still avail the threshold limit

[KASTURI SETHI]

I clarify my reply as under :-

In case E-Commerce Operator falls under the category of compulsory registration, the issue of threshold limit for registration in respect of restaurant services becomes meaningless/redundant. In other words, in this hypothetical situation, the question of separate threshold exemption for registration purpose does not arise.

In case E-Commerce Operator does not fall under the category of compulsory registration as pointed out by Madam Shilpi Jain, then threshold exemption of ₹ 20 lakhs for both services is admissible. Thus I concur with the views of Madam Shilpi Jain.

Thanks to Madam Shilpi Jain for throwing more light on the issue..

AI Summary

Threshold exemption may be lost if supplies via an e commerce operator trigger compulsory registration and tax collection obligations. Whether a standalone restaurant supplying on-premises and through an electronic commerce operator can claim the threshold exemption for registration depends on the ECO's treatment: if the ECO is subject to compulsory registration because it must collect tax at source, the restaurant cannot claim the threshold exemption; if the ECO is not required to collect tax at source, the restaurant may avail the threshold exemption for its services.