GST WEEKLY UPDATE : 38/2021-22 (19.12.2021) By CA Vipul Khandhar
CA Vipul Khandhar
(The author is a well know Chartered Accountant practicing at Ahmedabad)
- Clarifications Regarding E-commerce Operators Liable To Pay GST On Restaurant Services:
CBIC clarified that the e-commerce operators are liable to pay GST on restaurant services. The GST Council in its 45th meeting held on 17th September, 2021 recommended to notify‚ ‘Restaurant Service’ under section 9(5) of the CGST Act, 2017. Accordingly, the tax on supplies of restaurant service supplied through e- commerce operators shall be paid by the e-commerce operator. Vide circular 167/2021 clarification has been given
| Sl
No |
Issue | Clarification | Analysis |
| 1. | Would ECO shavetostillcollectTCSincompliancewithsection52oftheCGST
Act, 2017? |
As ‘restaurant service’ has been notified under section 9(5) of the CGST Act, 2017, the ECO shall beliable to pay GST on restaurant services provided,with effect from the 1st January, 2022, through ECO. Accordingly, the ECOs will no longer be required to collect TCS and file GSTR 8 in respect of restaurant services on which it pays tax in terms of section 9(5).
On other goods or services supplied through ECO, which are not notified u/s 9(5), ECOs will continue to pay TCS in terms of section 52 of CGST Act, 2017 in the same manner atpresent. |
The ECOs will no longer be required to collect TCS and file GSTR 8 in respect of restaurant services on which it pays tax in terms of section 9(5). |
| 2. | Would ECOs have to mandatorily take a separate registration w.r.t supply of restaurant service [notified under 9(5)] through them even though they are registered to pay GST on services on their own
account? |
As ECOs are already registered in accordance with rule 8(in Form GST-REG 01) of the CGST Rules, 2017 (as a supplier of their own goods or services), there would be no mandatory requirement of taking separate registration by ECOs for payment of tax on restaurant service under section 9(5) of the CGST Act, 2017. | No separate registration require by ECO. |
| 3. | Would the ECOs be liable to pay tax on supply of restaurant service made by unregistered business
entities? |
Yes. ECOs will be liable to pay GST on any restaurant service supplied through them including by an unregistered person. | All the restaurant service either from registered or unregistered liable for GST in the hands of ECO. |
| 4. | What would be the aggregate turnover of person supplying ‘restaurant service’ through ECOs? | It is clarified that the aggregate turnover of person supplying restaurant service through ECOs shall be computed as defined in section 2(6) of the CGST Act, 2017 and shall include the aggregate value of supplies made by the restaurant through ECOs. Accordingly, for threshold consideration or any other purpose in the Act, the person providing restaurant service through ECO shall account such services in his aggregate turnover. | Total supply directly and via ECO has been counted for aggregate turnover. |
| 5. | Can the supplies of restaurant service made through ECOs be recorded as inward supply of ECOs (liable to reverse charge) in GSTR 3B? | No. ECOs are not the recipient of restaurant service supplied through them. Since these are not input services to ECO, these are not to be reported as inward supply (liable to reverse charge). | ECO has not been liable for the RCM on restaurant service. |
| 6. | Would ECOs be liable to reverse proportional input tax credit on his input goods and services for the reason that input tax credit is not admissible on ‘restaurant service’? | ECOs provide their own services as an electronic platform and an intermediary for which it would acquire inputs/input service on which ECOs avail input tax credit (ITC). The ECO charges commission/fee etc. for the services it provides. The ITC is utilised by ECO for payment of GST on services provided by ECO on its own account (say, to a restaurant). The situation in this regard remains unchanged even after ECO is made liable to pay tax on restaurant service. ECO would be eligible to ITC as before. Accordingly, it is clarified that ECO shall not be required to reverse ITC on account of restaurant services on which it pays GST in terms of section 9(5) of the Act.
It may also be noted that on restaurant service, ECO shall pay the entire GST liability in cash (No ITC could be utilised for payment of GST on restaurant service supplied through ECO) |
that ECO shall not be required to reverse ITC on account of restaurant services on which it pays GST in terms of section 9(5) of the Act. It may also be noted that on restaurant service. |
| 7. | Can ECO utilize its Input Tax Credit to pay tax w.r.t ‘restaurant service’ supplied
through the ECO? |
No. As stated above, the liability of payment of tax by ECO as per section 9(5) shall be discharged in cash. | ECO shall pay the entire GST liability in cash (No ITC could be utilised for payment of GST on restaurant service supplied through ECO). |
| 8. | Would supply of goods orservicesother than‘restaurant service’ through ECOs be taxed at 5% without ITC? | ECO is required to pay GST on servicesnotified under section 9(5), besidesthe services/other supplies made on his own account.On any supply that is not notified under section 9(5), that is supplied by a person through ECO, the liability to pay GST continues on such supplier and ECO shall continue to pay TCS on such supplies.
Thus, present dispensation continues for ECO, on supplies other than restaurant services. On such supplies (other than restaurant services made through ECO) GST will continue to be billed, collected and deposited in the same manner as is being done at present. ECO will deposit TCS on such supplies. |
Supply not notified under section 9(5), that is supplied by a person through ECO, the liability to pay GST continues on such supplier and ECO shall continue to pay TCS on such supplies. |
| 9. | Would ‘restaurant service’ and goods or services other than restaurant service sold by a restaurant to a customer under the same order be billed differently? Who shall be liable for raising invoices in such cases? | Considering that liability to pay GST on supplies other than ‘restaurant service’ through the ECO, and other compliances under the Act, including issuance of invoice to customer, continues to lie with the respective suppliers (and ECOs being liable only to collect tax at source (TCS) on such supplies), it is advisable that ECO raises separate bill on restaurant service in such cases where ECO provides other supplies to a customer under
the same order. |
It has been advised to have separate bill for the restaurant service & other servie. |
| 10. | Who will issue invoice in respect of restaurant service supplied through ECO – whether by the restaurant or
by the ECO? |
The invoice in respect of restaurant service supplied through ECO under section 9(5) will be issued by ECO. | ECO will issue the invoice. |
| 11. | Clarification may be issued as regard reporting of restaurant services, value and tax liability etc in the
GST return. |
A number of other services are already notified under section 9(5). In respect of such services, ECO operators are presently paying GST by furnishing details in GSTR 3B.
The ECO may, on services notified under section 9 (5) of the CGST Act,2017, including on restaurant service provided through ECO, may continue to pay GST by furnishing the details in GSTR 3B, reporting them as outward taxable supplies for the time being. Besides, ECO may also, for the time being, furnish the details of such supplies of restaurant services under section 9(5) in Table 7A(1) or Table 4A of GSTR-1, as the case maybe, for accounting purpose.
Registered persons supplying restaurant services through ECOs under section 9(5) will report such supplies of restaurant services made through ECOs in Table of GSTR-1 and Table 3.1 (c) of GSTR-3B, for the time being. |
Registered persons supplying restaurant services through ECOs under section 9(5) will report such supplies of restaurant services made through ECOs in Table of GSTR-1 and Table 3.1 (c) of GSTR-3B, for the time being. |
- Bill of Entry (BE) Regulations amended to ensure faster clearances of Imports:
BE to be filed in advance as per the following time-limits:
Latest by end of the day of arrival of the Vessel/Aircraft/ Vehicle
- Imports from Bangladesh. Maldives, Myanmar, Pakistan and Sri Lanka at all Sea Ports
- All imports at all Air Cargo Complexes
- All imports at all Land Customs Stations (LCS)
Latest by end of the day preceding the day of arrival of the Vessel/Aircraft/Vehicle
- Imports from all countries other than those mentioned above at all Sea Ports
- All imports at all Inland Container Depots (ICD)
Advance BE can be filed on the strength of either an MBL/MAWB or the HBL/HAWB or both. Details of MBL/MAWB in BE can be updated later, on auto-approval mode (no approval from Customs is required)
- Judicial Decision:
(i) Decision of Hon’ble SC Regarding GSTR-3B is a ‘Return’ specified u/s 39 of GST Act: Supreme Court reverses Gujarat HC’s order
The Supreme Court has reversed the Gujarat High Court’s judgment wherein the High Court observed that GSTR-3B is not a return specified under section 39 of the Central and State Goods and Services Acts. In the year 2019, the Gujarat High Court held that Section 39(1) of the CGST/GGST Act provides that every taxpayer, except a few special categories of persons, shall furnish a monthly return in such form and manner as may be prescribed. Rule 61 of the CGST Rules/GGST Rules prescribe the form and manner of submission of monthly return. Sub-rule 1 of Rule 61 of the CGST Rules/GGST Rules provides that the return required to be filed in terms of Section 39(1) of the CGST/GGST Act is to be furnished in Form GSTR-3B. The High Court further held that It would be apposite to state that initially it was decided to have three returns in a month, i.e. return for outward supplies i.e. GSTR-1 in terms of Section 37, return for inward supplies in terms of Section 38, i.e. GSTR-2 and a combined return in Form GSTR-3. However, considering technical glitches in the GSTN portal as well as the difficulty faced by the taxpayers it was decided to keep filing of GSTR-2 and GSTR-3 in abeyance. Therefore, in order to ease the burden of the taxpayer for some time, it was decided in the 18th GST Council meeting to allow the filing of a shorter return in Form GSTR-3B for the initial period. It was not introduced as a return in lieu of return required to be filed in Form GSTR-3.
Disclaimer:
This publication contains information for general guidance only. It is not intended to address the circumstances of any particular individual or entity. Although the best of endeavour has been made to provide the provisions in a simpler and accurate form, there is no substitute to detailed research with regard to the specific situation of a particular individual or entity. We do not accept any responsibility for loss incurred by any person for acting or refraining to act as a result of any matter in this publication.
