A Restaurant registered under the Composition Scheme can supply Foods through an ecommerce operator

Issue for Consideration

Whether a restaurant service provider, having opted for the Composition Scheme under Section 10 of the CGST Act, 2017, is legally prohibited from supplying restaurant services through an e-commerce operator, where such services are notified under Section 9(5) of the Act and tax is payable by the e-commerce operator.

 Relevant Statutory Provisions

1. Section 9(5), CGST Act, 2017
   Provides that for certain notified services supplied through an e-commerce operator, the tax shall be paid by the e-commerce operator, who shall be deemed to be the supplier.
2. Section 52(1), CGST Act, 2017
   Mandates collection of tax at source (TCS) by an e-commerce operator on supplies made through it, excluding supplies on which tax is payable under Section 9(5).

Section 10(2)(d), CGST Act, 2017
Restricts eligibility for composition levy where a person makes supply of goods or services through an electronic commerce operator who is required to collect tax at source under Section 52

Analysis

1. Effect of Section 9(5)

Restaurant services supplied through an e-commerce operator have been notified under Section 9(5). Consequently:

• • The e-commerce operator is deemed to be the supplier for GST purposes.
  • The restaurant is not liable to pay output tax on such supplies.

The tax incidence is fully discharged by the e-commerce operator.

2. Applicability of Section 52(1)

Section 52(1) expressly excludes from its scope:

supplies on which tax is payable under Section 9(5).

Accordingly, for restaurant services covered under Section 9(5):

• The e-commerce operator is not required to collect tax at source.
• Section 52 does not operate in respect of such supplies.

This exclusion is explicit and transaction-specific, not conditional or discretionary.

3. Interpretation of Section 10(2)(d)

Section 10(2)(d) restricts composition levy only where supplies are made through:

an electronic commerce operator who is required to collect tax at source under Section 52.

The condition embedded in the provision is cumulative and not descripttive.
For the restriction to apply, the following must coexist:

1. Supply through an e-commerce operator; and
2. The e-commerce operator must be required to collect TCS under Section 52.

In respect of Section 9(5) restaurant services:

• Section 52(1) expressly negates the TCS obligation.
• Therefore, the e-commerce operator is not an operator “required to collect tax at source” for such supplies.

Where a statutory condition fails, the restriction cannot be invoked.

Harmonious Construction

A combined reading of Sections 9(5), 52(1), and 10(2)(d) yields a coherent outcome:

Section 9(5) reallocates tax liability to the e-commerce operator.

Section 52(1) correspondingly removes TCS for such supplies.

Section 10(2)(d) applies only where TCS-based e-commerce supplies exist.

Nature of Supply by the Restaurant

Given the deeming fiction under Section 9(5), the restaurant:

• • • Is not the supplier for GST purposes in respect of such outward supply;
    • Does not discharge output tax; and

 Merely participates in the transaction framework facilitated by the e-commerce operator.

This further weakens the premise that the restaurant is “making supply through an e-commerce operator” in the sense contemplated by Section 10(2)(d).

Conclusion

Based on a strict, literal, and harmonious interpretation of the CGST Act, 2017, in my opinion

A restaurant registered under the Composition Scheme is not barred by Section 10(2)(d) of the CGST Act, 2017 from supplying restaurant services through an                     e-commerce operator, where such services are notified under Section 9(5) and tax is payable by the e-commerce operator.