QUESTION
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?
ANSWER
Facts of the case:
XYZ, a restaurant, is serving food and beverages in it's premises and certain
goods are also sold from it's shop counter.
Law Applicable:
Notification 17/2017 has been amended with effect from 1.1.2022 to bring into
effect the following entry;
"(iv) supply of restaurant service other than the services supplied by restaurant, eating joints etc. located at specified premises"
Interpretation:
w.e.f 1.1.2022 E commerce operator is the person liable to pay tax in respect of
restaurant services provided through it if the restaurant is located at other
than specified premises. Since XYZ is not located at specified premises
therefore it will be covered by the above notification.
Conclusion:
So to answer your questions;
Question 1: 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 ?
XYZ will continue to charge GST @ 5% because ECO (eg: swiggy/zomato) is not
involved in the provision of service in the resaurant.
Question 2: XYZ will continue
to charge respective GST rate for the items served in the shop?
XYZ will charge respective GST rate for items sold from the shop
because this is a supply of goods and not provision of restaurant service.
PLEASE NOTE - The word used by you in the question is "SERVED".
The correct word should be "SOLD". The items of the shop can not
be served in the shop they can be sold in the shop and can be served in the
restaurant.
Question 3: When the items
sold from restaurant is sold through e – commerce such as Swiggy, Zomato etc.
whether XYZ is required to charge GST or the e – commerce operator?
When the restaurant service is provided through ECO (eg: Swiggy/Zomato) then the
tax shall be charged by ECO as per the amended notification 17/2017 w.e.f
1.1.2022.
Question 4: When the items
sold from sweet and namkeen shop is sold through e – commerce such as Swiggy,
Zomato etc. whether XYZ is required to charge GST or the e – commerce operator?
When the items that are sold from the shop are served through ECO then this is
and extension of restaurant service from the table of the restaurant to the
doorsteps of the customer. This case is similar to the instance where items
from the shop are served on table of the restaurant and this constitutes
"restaurant service". Therefore delivery of shop items through ECO is an
extension of restaurant service to the doorsteps of the customer.
ECO's like swiggy and zomato are not working in the lines of Amazon delivery.
Therefore this can not be said to be sale of goods through ECO.
Amended notification 17/2017 will apply w.e.f 1.1.2022 and ECO will be liable to
charge GST @ 5%.
Question 5: When XYZ himself
(without through e – commerce) is selling the items in restaurant and shop what
will be GST Rate and who will be liable to pay GST?
To summarise the concept;
- Food served in restaurant will attract 5% (Restaurant Service)
- Shop items sold from shop will attract respective rates (Sale
of Goods)
- Shop items served in the restaurant will attract 5%
(Restaurant Service)
- Food served in restaurant is sold through ECO will attract amended
notification 17/2017 w.e.f 1.1.2022 (Restaurant Service through ECO)
- Shop items sold through ECO will attract amended notification 17/2017 w.e.f
1.1.2022 (Restaurant Service through ECO) (Reply dt. 09/12/2021)