Composition scheme for Restaurants delivering through swiggy

[Neer Maru]

As per section 10(2)(d) of CGST Act, 2017, registered persons supplying services through e-commerce operators which are required to collect TCS under section 52 are not eligible for composition scheme.

As per explanation to section 52(1), value of supply under section 9(5) is excluded for purpose of TCS as the liability of the original supplier is shifted on the e-commerce operator.

So does this mean that swiggy is an 'e-commerce operator which is NOT required to collect TCS under section 52' and hence restaurants can opt for composition scheme or are they still ineligible to do so as swiggy is an e-commerce operator registered for TCS for services other than those under 9(5)

Expert views needed.

[YAGAY andSUN]

To understand whether restaurants can opt for the composition scheme under the CGST Act, 2017, when supplying services through Swiggy (which is an e-commerce operator), we need to break down the relevant provisions and apply them to the specific case.

Key Provisions:

1. Section 10(2)(d) of the CGST Act, 2017:
   • This provision specifically excludes a registered person from opting for the composition scheme if they are supplying services through an e-commerce operator that is required to collect Tax Collected at Source (TCS) under Section 52 of the CGST Act, 2017.
2. Section 52(1) - TCS on E-commerce Operators:
   • Section 52(1) mandates that e-commerce operators (like Swiggy, Zomato, etc.) are required to collect TCS on behalf of the suppliers (in this case, the restaurants) for the supplies made through their platforms.
   • The TCS rate is 1% for both central tax (CGST) and state tax (SGST) (or 1% integrated tax (IGST) for inter-state supplies).
3. Explanation to Section 52(1):
   • As per the Explanation to Section 52(1), the value of supply under section 9(5) (which deals with the services provided by e-commerce operators) is excluded for the purpose of TCS.
   • This means that Swiggy, as an e-commerce operator, is not required to collect TCS on the supply of restaurant food services under section 9(5) (i.e., where the liability to collect TCS is shifted to the e-commerce operator under specific conditions like food delivery services). The liability to collect TCS is not on Swiggy but on the restaurant themselves, provided they are not engaged in any other services that require TCS collection.

Does this Mean that Swiggy is Not Required to Collect TCS for the Restaurants?

• Yes, in the case of restaurants providing food services under section 9(5), Swiggy is not required to collect TCS on the supply made by the restaurant for the food delivery. This is because the liability of the restaurant is shifted to Swiggy under section 9(5), and Swiggy is acting only as an intermediary.
• However, Swiggy is required to collect TCS for other services (like if it were facilitating supplies of goods, digital goods, or other services through its platform).

Can Restaurants Opt for the Composition Scheme?

Since Swiggy is not required to collect TCS on restaurant supplies under section 9(5) (as per the explanation to Section 52), the key point to note here is:

• Restaurants can still opt for the composition scheme because they are not subject to TCS for the food delivery services provided through Swiggy under section 9(5). The composition scheme eligibility only gets disqualified when a registered person supplies services through an e-commerce operator that is required to collect TCS under Section 52. Since the TCS requirement for the restaurant is shifted to the operator, they are not directly affected by TCS and remain eligible for the composition scheme.

Expert View:

• Conclusion: Yes, restaurants can opt for the composition scheme even if they are supplying services through Swiggy, as long as their supply falls under the scope of section 9(5) (food delivery services) and Swiggy is not collecting TCS for that specific service.
  • Important Consideration: If a restaurant is involved in other types of supplies that require TCS collection by Swiggy (for instance, supplies of goods or digital products), they might lose eligibility for the composition scheme. But for food services, as per the provisions you’ve quoted, they can remain eligible.

In summary, for food services, Swiggy is not required to collect TCS, and restaurants can still opt for the composition scheme.

[KASTURI SETHI]

M/s. Yagay and Sun,

Sir, A huge thank you for your fool-proof solution to the complicated issue. You have come back in a new form as "all-rounder" in taxation field. Your replies and articles speak volume of this new form. 

[Sadanand Bulbule]

I too endorse the well deciphered clarification.

[Neer Maru]

Thanks to all the experts who gave their valuable time and energy to decipher the query. Especially Ms/  Yagay & Sun for the meticulous Explanation.

[YAGAY andSUN]

Thank you Experts for your kind words. I truly appreciate the opportunity to work alongside such knowledgeable professionals. Your support means a lot to me.

Regards,

YAGAY & SUN

[PRATIK MAKHANIA]

In continuation of above question, 

How to report turnover from Zomato and Swiggy in the GST Composition return (CMP-08), considering they have already paid GST under Reverse Charge Mechanism (RCM) ?

AI Summary

Food delivery platforms may qualify as e-commerce operators requiring TCS collection, affecting restaurant composition scheme eligibility under section 10(2)(d) A registered person questioned whether restaurants delivering through food delivery platforms can opt for composition scheme under GST. The query centers on whether such platforms qualify as e-commerce operators required to collect TCS under section 52, which would make restaurants ineligible for composition scheme per section 10(2)(d) of CGST Act 2017. The person noted that section 9(5) supplies are excluded from TCS calculation since liability shifts to the e-commerce operator. A follow-up question addressed how to report turnover from food delivery platforms in composition returns when GST is already paid under reverse charge mechanism.