The question is after making liable to Zomato & Swiggy for the payment of GST from 1st of Jan, 2022, whether the restaurants, cloud kitchens, central kitchen selling food & beverages completely through eCommerce operators like Zomato or Swiggy would be liable for obtaining or continuing registration?
For getting its answer, we need to read the section 22 and section 23 of CGST Act, 2017 along with the notification number 65/2017 – Central Tax dt. 15th Nov, 2017.
1. As per the section 22 of CGST Act, registration is mandatory for persons making taxable supplies exceeding 20 lacs or 10 lacs as the case may be.
2. As per the section 23 of CGST Act, registration is exempted if the person is engaged exclusively in supplies not liable to tax or the supplies are completely exempted from tax.
3. It’s important to note that restaurants selling through Zomato or Swiggy are neither providing supplies not liable to tax nor providing any supplies wholly exempted from tax therefore they are not covered under the section 23(1) of CGST Act.
4. Section 23 of CGST Act, also empowers Government to issue notifications for granting exemption from taking registration under GST.
5. List of few notifications issued u/s 23 is as following:
- Persons exclusively supplies liable for reverse charge u/s 9(3) are exempted from taking registration under GST.
- Persons engaged exclusively in providing services through ECO who are liable for collection tax on such services u/s 52 are exempted from obtaining registration provided their aggregate turnover not exceed 20 lacs or 10 lacs and services are not notified u/s 9(5).
This notification provides relief/ exemption to service providers from taking mandatory GST registration u/s 24 of CGST Act i.e. where any person make any supply through e-commerce operator who is liable u/s 52 for TCS on such supplies.
Hence it’s clear that, restaurants are not covered by this notification. Since their services are notified u/s 9(5) and the e-commerce operator is not liable for TCS in this regard.
Hence it is clear that even though restaurants are not required to make payment of GST directly to government but still they are liable to obtain or continue to retain their GST registration as long as they are covered by section 22 and so long no notification specifically exempting them is issued under section 23.