supply of restaurant service other than the services supplied by restaurant, eating joints etc. located at specified premises
This entry was introduced to simplify GST compliance in the online food delivery sector (e.g. Zomato, Swiggy). Prior to this amendment, restaurants were responsible for collecting and paying GST, even when orders were routed through ECOs. The change makes ECOs liable to pay GST, thereby centralizing tax collection and improving compliance.
ECOs like Zomato or Swiggy must :-
- Pay 5% GST on the total taxable value of restaurant services supplied through them.
- Issue invoices, maintain transaction-level records, and report in GSTR-1 and GSTR-3B.
- The actual restaurant is not required to charge GST on such ECO- facilitated orders.
Note :- ECOs cannot claim ITC on inputs and input services if paying GST at 5% under this entry.
As per the explanation inserted in Notification No. 17/2021-CTR, the term "specified premises" means premises located within hotels, inns, guest houses, clubs, or other commercial places where the declared room tariff is Rs. 7,500 or more per night.
Services provided by such restaurants are not covered under Section 9(5) and will continue to be taxed in the hands of the restaurant directly (forward charge).
Order from Local Restaurant via Zomato :-
Mr. A places an order through Zomato from a restaurant not located inside a hotel. Here, Zomato is liable to pay GST under Section 9(5). Order from 5-Star Hotel Restaurant via Swiggy :-
Ms. B orders food from a restaurant located within a hotel with declared tariff of Rs. 8,500/night. This restaurant is excluded from Section 9(5). Hence, Swiggy is not liable and the restaurant will charge GST directly.
Cloud Kitchen on App :-
Cloud kitchens offering prepared food via delivery apps are covered as restaurant services. GST is payable by the ECO under Section 9(5), provided they're not located in specified premises.
Entry No. 4 under Notification No. 17/2017-CTR is a major reform targeting the online food delivery ecosystem. By shifting tax liability to the ECO, the Government has ensured better tracking and reporting of transactions while easing the compliance load for small and medium-sized food providers. The carve-out for "specified premises" ensures that luxury hotel restaurants continue to comply under forward charge, maintaining tax equity across segments.