Partner GST Declaration

Notification no. 17/2021 Central Tax (rate) was issued on 18 November 2021. This communication is intended to inform you about the implications of the above-mentioned GST notification applicable from 01 January 2022.

We wish to bring to your attention the latest Notification No. 17/2021 dated November 18, 2021, issued by Central Board of Indirect Tax and Customs (CBIC) through which the e-commerce operator (ECO) is now made liable to pay GST on “restaurant services” provided through the e- commerce platform. Note that this change is not applicable for restaurant services provided by premises with a declared tariff of Rs. 7,500/- or above per day. At present, this provision shall be effective from January 01, 2022.

Figato Services Private Limited (hereinafter referred to as “HUNGRS” or “the company”) qualifies as an “e-commerce operator” under Section 2(45) of Central Goods and Services Tax Act, 2017. Therefore, based on the above notification read with Section 9(5) of CGST Act, 2017, HUNGRS will be responsible to pay GST on restaurant services provided through its website / app from January 01, 2022.

In this regard to comply with the above change, Figato Services Private Limited (hereinafter referred to as “BTPL” or “HUNGRS” or “the company”) is classified as an ECO as per the applicable provisions of the GST law and is required to bifurcate the eateries operating on its platform into two broad categories as below:

1.     Restaurant:

As per Notification No.11/2017 – Central Tax Rate F.No.354/117/2017-TRU dated 28th June, 2017, “restaurant services” is defined as “Restaurant service means supply, by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied”.

A restaurant is a place which is in the business of preparing and serving food on the premises or as takeaway. An illustration under this category is provided below:

1. Restaurants located in a premises where declared tariff is not exceeding Rs. 7,500 per day and providing restaurant services;
   1. Food and beverage sold as a part of restaurant services, and which qualifies as restaurant services;
   1. Cloud kitchens providing restaurant services; etc.
   1. Standalone restaurants which are not ice cream parlors or bakeries.

As per Notification No. 17/2021 dated November 18, 2021, HUNGRS shall be responsible for charging, collecting and paying GST @ 5% to the relevant GST authorities on supply of “restaurant services” made by such restaurants through the HUNGRS’s platform. The payments will be made to these restaurants after deducting such GST.

For restaurants with no GSTIN, HUNGRS shall be responsible for charging, collecting and paying GST @ 5% on the total order value.

HUNGRS will also disclose such payment made in the GST returns as prescribed by CBIC.

2.     Non-restaurant:

Shops / suppliers supplying other edible goods which do not qualify as “restaurant services” shall fall under this category. Some of the examples under this category is:

• Standalone ice cream parlor who is not supplying “restaurant services”;
  • Standalone bakery who is not supplying “restaurant services”;
  • Sweet shops who are not supplying “restaurant services”;
  • Standalone chocolate shop who is not supplying “restaurant services”
  • Restaurants in hotels where the declared tariff of any accommodation unit is more than INR 7500/-

Note: the above list is not exhaustive and is merely illustrative for the purpose of understanding the definition of non-restaurant basis interpretation of press releases and various notifications issued by the government of India in relation to GST.

Such suppliers will continue to charge and pay applicable GST as per their current practice. These suppliers will have to mandatorily get themselves registered under GST in line with Section 24 of the CGST Act, 2017. HUNGRS shall only be responsible to deduct and pay tax collected at source (TCS) under section 52 of the CGST Act 2017 at the rate of 1%. Note that there is no change in the process of collection and payment of GST for such suppliers falling under this category.

In addition to the above two categories, given that there are eateries which provide both restaurant and non-restaurant supplies on the platform from the same RID, we have come up with a separate category as below.

3.    Hybrid:

In case where a supplier is involved in providing “restaurant services” and supplying other goods that does not qualify as “restaurant services”, such supplier will be categorized under ‘hybrid model’.

Such supplier will have to bifurcate the “restaurant services” and other goods supplied through ECO. GST on “restaurant services” provided through HUNGRS shall be paid by

HUNGRS and applicable GST on goods supplied through HUNGRS shall continue to be paid by the supplier.

Note that these suppliers will have to mandatorily get themselves registered under GST in line with Section 24 of the CGST Act, 2017 has no turnover threshold shall be applicable for supply of goods through e-commerce operators.

Further, HUNGRS shall also be responsible to deduct and pay tax collected at source (TCS) under section 52 of the CGST Act 2017 at the rate of 1% on the value of other goods supplied through HUNGRS’s platform.

Accordingly, we request you to categorize yourself into any one of the above categories via the declaration below. We also request you to immediately communicate to us in case there is any change in the particulars given in the declaration at any time.

Wherever appropriate, we shall suggest the appropriate classification as per our understanding of the law. However, it is solely your responsibility to classify yourself correctly.

Please note that this will form a part of the addendum to your MOU with HUNGRS effective immediately.

We request you to consider this communication of utmost importance since it would also enable us to make the necessary changes in our ERP system.

Thanking you in advance for your co-operation. Best regards,

DECLARATION FOR THE PURPOSES OF DETERMINING GST COLLECTION

The following declaration is given with true understanding of the categorization and the full understanding of the aforementioned notification as issued under the GST law:

I/We………………………………………………………………………………………………….

(Legal Name of the entity), having our place of business at……………………………………………………………………………………………………………………………………

and having the FSSAI No. ………………………………………………………..    hereby acknowledge the understanding of the Notification No. 17/2021 Central Tax (rate) dated 18 November 2021 read with Section 9(5) of CGST Act, 2017 and applicable CGST Rules, 2017.

Accordingly, we declare that we classify our business as: ……………………………..                              

1. Restaurant
2. Non- Restaurant
3. Both (referred as “Hybrid”)

I/We confirm that we have classified our business correctly above.

I/We shall indemnify Figato Services Private Limited (hereinafter referred to as “HUNGRS”,or “the company”), its affiliates, its directors and its employees from any demand of tax, interest or penalties arising on the company in case the declaration is found to be fallacious. In addition, we undertake to declare as below and indemnify HUNGRS accordingly:

Declaration applicable in case you have selected “restaurant” above

1. I/ We understand and acknowledge that HUNGRS shall collect and deposit GST at 5% to the extent of “restaurant services” provided by us on HUNGRS’s website/ application (‘HUNGRS’s platform’). I/ We undertake that I/ we have carried out a determination of items that are supplied by us and undertake that all of these are to be categorized as “restaurant services”.
2. I/ We understand that HUNGRS is merely responsible to collect and deposit the GST with the relevant GST authorities on “restaurant services” based on the information and classification that I/ We provide to HUNGRS. HUNGRS is not responsible to determine whether a particular transaction qualifies as “restaurant service” or not as HUNGRS is not privy to any internal activities carried out by us.
3. I/ We undertake to notify HUNGRS immediately if the classification of our business changes in the future.
4. I/ We hereby undertake and confirm that I/ We shall indemnify HUNGRS, its Affiliates, subsidiaries, directors, officers, employees, agents and service providers from any notices, liabilities, penalties, claims or demands, (including all costs, expenses, interests, and attorney’s fees on account thereof that may be made) in connection with any tax collected at source under section 52 of the CGST Act 2017 which may arise in case of any incorrect determination of items falling under “restaurant services” as made by us hereinabove.
5. All liabilities arising from any incorrect classification of items by us including any interest, penalty or any other amount demanded by the appropriate authorities shall be payable solely by us and shall remain our sole responsibility.
6. I/ We undertake to cooperate with HUNGRS in case of any enquiry by the GST authorities on supplies made by us including furnishing any information required by the authorities, including copies of licenses, permits, approvals to establish that we qualify as “restaurant services”.

Declaration applicable in case you have selected “non-restaurant” above

1. I/ We understand and acknowledge that we shall be solely liable to pay GST on the supplies for “non-restaurant services” provided by us on HUNGRS’s website/ application (‘HUNGRS’s platform’). I/ We undertake that we have carried out a determination of items that are supplied by us and undertake that all these falls under “non-restaurant services”.
2. I/ We understand that HUNGRS shall not be responsible to deposit the GST on any supplies made by us as these qualify as “non – restaurant services”. HUNGRS is not responsible to determine whether a particular transaction qualifies as “non-restaurant service” or not as HUNGRS is not privy to any internal activities carried out by us.
3. I/ We undertake to notify HUNGRS immediately if the classification of our business changes in the future.
4. I/ We hereby undertake and confirm that I/ We shall indemnify HUNGRS, its Affiliates, subsidiaries, directors, officers, employees, agents and service providers from any notices, liabilities, penalties, claims or demands, (including all costs, expenses, interests, and attorney’s fees on account thereof that may be made) in connection with any incorrect determination of items falling under “non – restaurant services” as made by us hereinabove.
5. In case the GST authorities demand tax on us (for example asking us to reverse any input tax credit on account of any incorrect classification as determined by us), the liability arising therefrom including any interest, penalty or any other amount demanded by the authorities shall be payable solely by us and shall remain our sole responsibility.
6. I/ We undertake to cooperate with HUNGRS in case of any enquiry by the GST authorities on supplies made by us including furnishing any information required by the authorities, including copies of licenses, permits, approvals to establish that we qualify as “non- restaurant services”.

Declaration applicable in case you have selected “hybrid” above

1. I/ We understand and acknowledge that HUNGRS shall be responsible for collecting and depositing GST at the rate 5% of the services which fall under the category of “restaurant services” and are provided by us on HUNGRS’s website / application (‘HUNGRS’s platform’) and we shall be liable to pay GST on the supplies on goods and services which fall under the category of “non-restaurant services” provided by us on HUNGRS’s platform. I/ We undertake that we have carried out a determination of items that are supplied by us and undertake what items fall under “restaurant services” and what items fall under “non-restaurant services”.
2. I/ We understand that HUNGRS is merely responsible to collect and deposit the GST on “restaurant services” with the relevant GST authorities based on the information and classification that I/ we provide to them. HUNGRS is not responsible to determine whether a particular transaction qualifies as “restaurant service” or not as HUNGRS is not privy to any internal activities carried out by us.
3. I/ We undertake to notify HUNGRS immediately if the classification of our business changes in the future.
4. I/ We hereby undertake and confirm that I/ We shall indemnify HUNGRS, its Affiliates, subsidiaries, directors, officers, employees, agents and service providers from any notices, liabilities, penalties, claims or demands, (including all costs, expenses, interests, and attorney’s fees on account thereof that may be made) in connection with any tax collected at source under section 52 of the CGST Act 2017 which may arise in case of any incorrect determination of items falling under “restaurant services” and “non-restaurant services” as made by us hereinabove.
5. All liabilities arising from any incorrect classification of items by us including any interest, penalty or any other amount demanded by the appropriate authorities shall be payable solely by us and shall remain our sole responsibility.
6. I/ We undertake to cooperate with HUNGRS in case of any enquiry by the GST authorities on supplies made by us including furnishing any information required by the authorities, including copies of licenses, permits, approvals to establish that certain items in our services offering qualify as “restaurant services” and “non-restaurant services”.

For,

Authorized Signatory: –

Date:     

Note: In case you would like to update the item level GST percentages on the GST menu you may do the same via POS systems, HUNGRS web portal and through the partner support team (as applicable).