Restaurant services

[VishnuPriya R]

In case of restaurant services, if they opt for 5% rate of GST for outward supplies by virtue ofNotification No. 20/2019-Central Tax (Rate). They are not eligible for availment of ITC as per the notification. But however, if inadvertenly they have availed an ITC say for 2 months and subsequently found out the same and reversed the ITC along with interest. Can they still continue in 5% rate of tax or because they have availed inadvertenly ITC for 2 months and subseqently reversed the same, the benefit of 5% does not applicable to them and subsequently apply 18% on outward supply.

 

[KASTURI SETHI]

Dear Querist,

ITC taken and subsequently reversed  along  with interest tantamounts to "credit not taken". You can continue with 5% option.  You have reversed on your own. It proves your bona fides..

[Sadanand Bulbule]

I endorse the legal position expressed by Sh. Sethi Sir

[VishnuPriya R]

Thank you sir for the clarification

[Shilpi Jain]

Standalone Restaurants liable @5% only. Just because you may have taken credit for some period does not mean that you can pay GST @18%. There is a specific explanation in this regard in the rate notification itself.

AI Summary

Restaurants Can Maintain 5% GST Rate After Reversing ITC with Interest, No Need to Switch to 18% Rate. A discussion on a forum addressed a query regarding the Goods and Services Tax (GST) for restaurant services. The issue involved whether a restaurant that opted for a 5% GST rate, as per Notification No. 20/2019-Central Tax (Rate), could continue with this rate after inadvertently availing and later reversing Input Tax Credit (ITC) with interest. Respondents clarified that reversing ITC with interest is considered as 'credit not taken,' allowing the restaurant to maintain the 5% GST rate. They emphasized that taking credit temporarily does not necessitate switching to an 18% GST rate.