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GST dept probing if restaurants escaped taxes on packaging charges: Report
Several eateries on food aggregator platforms like Zomato received summons from the department asking details of GST on packaging charges since Jan 1, 2022.
The goods and services tax (GST) department is reportedly probing restaurants to know if they have escaped taxes on the 'packaging charge.'
This comes after the tax office had previously stepped in to recover GST on 'food and delivery' charges, according to an Economic Times report.
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HT.com cannot independently verify the authenticity of the information contained in the report.
This development came about as several eateries listed with food aggregator platforms like Zomato have received summons from the department in the past few months, asking them to share details of GST paid on packaging charges since January 1, 2022.
This GST on packaging charges which are collected from customers, have left tax authorities doubting whether the amounts have actually reached the state coffers, according to the report.
This is because GST is paid by service providers who recover it from the customer or the party receiving the service.
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In this case, the provider must pay tax to the government and recover it from customers ordering food on such online platform for the food, delivery, and packaging.
However, there is now a dispute on whether it is the restaurant or the online delivery platform which has to pay the GST.
“Apps believe packaging is a distinct supply and restaurants alone are liable to pay tax,” the report quoted Dinesh Agrawal who co-heads the indirect tax practice at the law firm Khaitan & Co.
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However, there are also views that if the packaging charges are listed separately on the bill, then they are towards an independent supply and should be taxed in the hands of the restaurants, according to the report which cited Ashish Karundia, founder of the CA firm, Ashish Karundia & Co.
