Quick Summary
More than a dozen bakery and chocolate companies have been served notices by the Directorate General of Goods and Services Tax Intelligence (DGGI) for allegedly underpaying Goods and Services Tax (GST) from July 2017 to March 2023, according to a report. These notices by the DGGI have raised concern in the industry. The problem is the tax rate concerning these businesses under the GST. The companies in question are said to have paid a 5% GST which is the usual rate charged at restaurants. Howev
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FAQ :
The main issue is that the Directorate General of Goods and Services Tax Intelligence (DGGI) alleges these firms have underpaid Goods and Services Tax (GST) by applying a 5% rate instead of the standard 18% rate.
More than a dozen bakery and chocolate companies, including several well-known brands, have received notices from DGGI offices in Mumbai and Ahmedabad.
The DGGI contends that these businesses do not qualify as restaurants, which typically charge a 5% GST rate, and therefore should be subject to the standard 18% GST rate.
While individual liabilities may not be substantial, the cumulative liability for the industry could exceed Rs 1,000 crore, not including potential penalties and interest.
Yes, this situation is similar to past classification disputes, such as those involving ice cream parlours, which were also required to pay an 18% GST rate.
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