Supply through E - Commerce

[Kaustubh Karandikar]

XYZ is having a sweet and namkeen shop. In the same premises and just adjacent to the shop, they are having restaurant services where tables and chairs are provided and the items available in the shop as well as the items exclusively for serving in the restaurant are served. Presently, XYZ is paying 5% GST on items served in the restaurant and for items served in the shop, the respective GST rate is charged. As per Notification No. 17/2017-Central Tax (Rate) dt. 28.06.2017 as amended by Notification No. 17/2021-Central Tax (Rate), dt. 18-11-2021 (w.e.f 01.01.2022), in case of supply of restaurant service other than the services supplied by restaurant, eating joints etc. located at specified premises, the tax shall be paid by the electronic commerce operator. As mentioned in the notification, specified premises means premises providing hotel accommodation service having declared tariff of any unit of accommodation above seven thousand five hundred rupees per unit per day or equivalent. In view of these changes w.e.f. 01.01.22, XYZ will continue to charge 5% GST or XYZ need not charge and E – Commerce Operator will charge 5% GST on items served in restaurant and XYZ will continue to charge respective GST rate for the items served in the shop? In my view, all items which are tagged as 5% GST will be considered as restaurant items and E - commerce will pay GST for such items to the authorities. For all other items, XYZ will continue to charge 5% GST. Views of the experts please.

[Shilpi Jain]

First of all how can the restaurant service be provided by e-comm operator!! The department is assuming certain things and further making a mess.

Assuming department's understanding is right, then for the items sold at shop (assuming these are only sold and jot served to eat), you will continue to charge the normal rate of tax and the ecomm operator will not be laible.

But i see lot of confusion coming i the way things are going to be implemented in the future.

[Ganeshan Kalyani]

It is heard that clarity will be brought to this issue by GST Council.

AI Summary

E commerce operator liability for restaurant supplies may transfer GST responsibility for dine in items to the operator under notification.
Whether the amended notification assigns tax collection responsibility for restaurant supplies to the electronic commerce operator is the central issue. Items served as restaurant supplies may fall within the e commerce operator's GST collection liability if supplied via e commerce, while goods sold purely at the shop for take away remain taxable by the supplier at their applicable rates. The provision excludes certain high tariff premises from that operator liability, creating implementation ambiguity.