QUESTION
My client having business of supplying food items thorough e-commerce operator (swiggy,
zomato etc.). It doesn’t provide space at his premise for consuming food items.
Client is preparing his invoice as follows: Particulars Amount (Rs.) Burger 100
Packing Charges 20 Delivery charges 20 Discount to be given by swiggy/zomato 40
Swiggy commission 30 Net amount receivable by client 70 Query: a) Whether it is
to be treated as service provided by restaurant? If yes, the what will be the
SAC for this service? b) How the GST will be charged on the above transaction as
per GST law?
ANSWER
Facts of the case:
Classification and rate of tax applicable on food supplied through Swiggy/Zomato.
Law applicable:
Notification No. 11/2017-Central Tax (Rate)
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[7.Heading 9963 (Accommodation, food and beverage services) |
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(i) Supply of 'hotel accommodation‟ having value of supply of a unit of accommodation above one thousand rupees but less than or equal to seven thousand five hundred rupees per unit per day or equivalent. |
6 |
- |
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(ii) Supply of 'restaurant service‟ other than at 'specified premises' |
2.5 |
Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation no. (iv)] |
SECTION 15 OF CGST ACT
'(2) The value of supply shall include''
c) incidental expenses, including commission and packing, charged by the
supplier to the recipient of a supply and any amount charged for anything done
by the supplier in respect of the supply of goods or services or both at the
time of, or before delivery of goods or supply of services;
Interpretation: Food supplied through Swiggy/Zomato will be classified as supply
of restaurant services at other than specified premises and will be taxable @ 5%
as per Notification No. 11/2017 Central tax (Rate).
Valuation will be done as per section 15 as follows:
Burger 100
Add: Packing Charges 20
Add: Delivery Charges 20
Less: Discount 40
Taxable value 100
Rs 30 Swiggy commission is paid out of the pocket of restaurant not the client.
Also it is not shown in invoice. Thus GST is charged on Rs 100/- regardless of
the fact that the suppliers receives net Rs 70 on the sale.
Conclusion:
Food supplied through Swiggy/Zomato will be treated as supply of Restaurant
service under Chapter Heading 9963 and GST will be charged @ 5% on Rs 100/-.