GST heat on restaurants over packaging charges amid new rate speculation for food apps

GST

GST department has reportedly sent summons to several restaurants over levy paid on ‘packaging charges,’ an Economic Times report said on Monday. The GST officials are investigating whether the eateries listed on food apps such as Swiggy and Zomato have escaped the tax on packaging charges or not.

The ET report said that most of the restaurants in question have been asked to share GST details regarding packaging charges since January 2022. The development comes amid buzz around GST authorities mulling over plans of imposing new five percent tax on food apps.

While there has been no official confirmation or denial, the ET report says that restaurants will be quizzed on whether the packaging charges collected from customers were deposited in the state coffers or not. It should be noted that in usual circumstances, the GST collected from the customer is paid by the service providers who recover it or the final party receiving the said service.

If that’s the scenario then provider must pay GST to the state coffers while recovering it from consumers ordering food on such online platform for the all three - food, delivery as well as packaging.

However, there is a persistent tussle between the food apps and eateries - Who will pay the GST? Dinesh Agrawal from law firm Khaitan & Co told ET that food apps are of view that restaurants should be paying the GST as packaging is a distinct supply. But there are differing views on this stance as well.

Previously, there was a strong buzz around the government coming up with five percent additional tax on food apps. However, Pankaj Chaudhary, Minister of State for Finance, recently clarified during the Budget Session of Parliament that 'as of now', the officials are not planning any such move.