Cloud kitchens, food delivery and the restaurant service fiction
The platform pays the tax on the food. Everything else about the transaction is still contested.
Restaurant service supplied through an electronic commerce operator, other than at specified premises, is taxed in the hands of the operator under Section 9(5). The restaurant does not charge tax on those supplies but must report the turnover. The contested questions are the treatment of delivery charges, packaging charges and platform fees, the position of cloud kitchens with no dine in facility, and the credit consequences for the restaurant whose output is taxed by someone else.
What is settled
The operator pays the tax on the restaurant service supplied through it, at the applicable rate, other than for specified premises.
The restaurant does not charge tax on that supply and must not, and it reports the turnover in the prescribed manner.
TCS does not apply to that supply.
The platform's own commission charged to the restaurant is a separate supply of service by the platform, taxable in the ordinary way with credit to the restaurant subject to the rate structure it operates under.
What is contested
Delivery charges. Whether they are part of the restaurant service, a separate service by the platform to the customer, or a service by the delivery partner, and the classification changes the rate and the liability.
Packaging charges, which follow the food where charged as part of it.
Cloud kitchens, where there is no dine in facility, and the characterisation of the supply as restaurant service has been examined in advance rulings with divergent reasoning.
Credit for the restaurant, which operates at a concessional rate without credit for restaurant service while paying tax on platform commission, delivery support and technology fees.
The specified premises question, which takes a restaurant located in a hotel above the notified threshold outside Section 9(5) and back into its own liability.
The operational discipline
Segregate the point of sale data by channel — dine in, takeaway, own delivery and platform — because each has a different treatment.
Reconcile the platform's Section 9(5) reporting to your own records monthly. A platform under reporting your turnover produces a notice to you.
Record the treatment of delivery and packaging charges in the platform agreement, and keep it consistent across platforms.
For a restaurant in a hotel, monitor the accommodation tariff against the specified premises threshold and file any declaration the rules require.
What to do on Monday
Segregate point of sale data by channel from the system level, not by later allocation.
Reconcile each platform's Section 9(5) reporting to your records monthly.
Fix the delivery and packaging charge treatment in the platform agreement.
Monitor the specified premises threshold where the restaurant is in a hotel.
This page states the general position. A reader with a specific question on their own facts may write to the GST practice at AMLEGALS.
Write to the GST practiceQuestions we are asked on this
Do we charge tax on platform orders?
Not for restaurant service through the platform other than at specified premises. The platform pays.
Who pays on delivery charges?
It depends on who supplies the delivery and how it is charged. Record the position in the platform agreement and apply it consistently.
Is a cloud kitchen supplying restaurant service?
Advance rulings have differed. The absence of a dine in facility is the department's point; the preparation and supply of food for immediate consumption is the taxpayer's.
Can we claim credit on platform commission?
Where you operate at the concessional restaurant rate without credit, no. That cost must be priced.
What if our restaurant is in a hotel?
Monitor the accommodation tariff against the specified premises threshold; above it the supply is outside Section 9(5) and your own liability revives.
In this cluster
- GST for electronic commerce operators: the complete obligation set
- Section 52 tax collection at source: collection, credit and mismatch disputes
- Section 9(5) notified services and the platform as deemed supplier
- Ride hailing, aggregators and the driver's registration question
- Marketplace sellers: registration, warehouse states and returns
- Coupons, cashbacks and platform funded discounts
- Convenience fees, delivery charges and composite supply on platforms
- Cross border digital supplies and the OIDAR overlap
- Influencer, creator and affiliate income under GST
GST Insights is published by AMLEGALS for general information. Law stated as on 3 September 2026. Not advice on any particular set of facts; not an advertisement or a solicitation under Rule 36 of the Bar Council of India Rules. Readers with a question on their own facts may write to the GST practice of their own accord.