Tax On restaurants service for ecommerce

This query is : Resolved

CA jignesh daiya (Querist)
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29 December 2022 Respected sir/madam.

Gst on Restaurants service are liable to be discharged BY ECO @5 % In RCM mode when Service Provided by Through Ecommerce Operator except 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. And Ecommerce Operator needs To issue invoice for the same But our concerns is following :-

When Any customer using Paybill Service available In Ecommerce application , How Ecommerce Application can generate the invoice as Items Description changes from Customer to customer and Restaurant are only generating the invoice in market scenario.

When invoices are generated by restaurant only as application does not know the things to be consumed by customer And Ecommerce application are collecting payment for paybill offer , How Gst Liability needs to be discharged by ECO ?

Request For Your revert ASAP .

Thanks in advance

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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11 July 2024 It seems like you are concerned about how GST liability should be discharged when services are provided through an Ecommerce Operator (ECO) for restaurant services, especially when the item descriptions vary from customer to customer and the restaurant generates invoices.

Here's a breakdown of the situation and some considerations:

### GST Liability for Restaurant Services via Ecommerce Operator

1. **GST on Restaurant Services:**
- As per GST regulations, restaurant services provided through an Ecommerce Operator (ECO) attract GST under Reverse Charge Mechanism (RCM) at 5%.
- However, this RCM applies only when the restaurant service is provided through an ECO and when the customer does not fall under the higher tariff bracket (above Rs. 7,500 per unit per day).

2. **Invoicing Process:**
- Typically, under RCM, the Ecommerce Operator is responsible for issuing the invoice for the services provided by the restaurant.
- The invoice should include details such as the name, address, GSTIN of the Ecommerce Operator, along with the details of the services provided by the restaurant.

3. **Paybill Service and Variability in Items:**
- If the Ecommerce application offers a Paybill service where customers can order items that vary from person to person, the challenge lies in generating a standardized invoice because the ECO may not know the exact items consumed by each customer.
- In such cases, the restaurant still needs to generate invoices for accounting purposes, but the ECO must ensure compliance with GST laws by reconciling these invoices and reporting the GST liability correctly.

4. **GST Discharge by Ecommerce Operator:**
- The ECO is required to discharge the GST liability on behalf of the restaurant under RCM.
- Even if the ECO does not know the specific items consumed by each customer, they are responsible for reporting the aggregate GST liability based on the invoices received from the restaurant.

### Practical Steps:

- **Coordination between Restaurant and ECO:** Ensure that there is clear communication and coordination between the restaurant and the ECO regarding the invoicing process.
- **Compliance with GST Laws:** Both the restaurant and the ECO should adhere to GST regulations concerning invoicing and tax liability.
- **Audit and Record-Keeping:** Maintain proper records of invoices generated by the restaurant and ensure reconciliation with the ECO's reporting of GST liability.

### Conclusion:

The key issue revolves around ensuring that GST liability is correctly discharged under RCM when restaurant services are provided through an Ecommerce Operator. While the ECO may not generate customer-specific invoices due to variable item descriptions, they are still obligated to report and discharge the GST liability based on the invoices provided by the restaurant.

For specific queries or complex situations, it's advisable to consult with a GST expert or a chartered accountant who can provide tailored advice based on the specific details of your transactions and operations.