Diners beware, eateries serve you GST fraud

BENGALURU: With the Goods and Services Tax rollout from July this year, eating at restaurants has become a costlier affair. But Bengalureans still head out and pay the amount mentioned in the bill, without checking if the GST charged is valid.Cheated consumers, lawyers and tax experts warn against restaurants overcharging diners under the garb of GST.

Restaurants, with a turnover of less than Rs 1 crore, are classified as composite tax payers and cannot charge diners GST. They are themselves only filing 5 per cent of their turnover as tax. But City Express, from a quick reality check, found these restaurants charging GST at 12 per cent.

Patil Kulkarni, assistant commissioner, Central Tax and Customs office, says, “If a restaurant is a composite tax payer, they should mention it clearly in the bill and cannot charge the customers GST.” He adds that he has not received such complaint against an eatery so far but it is too early to detect such a fraud. “Composite tax payers file their income tax returns quarterly. As the GST has been effective only from July 1, it is not possible to say if they are indulging in malpractices,” he says.

Bills submitted with the tax office would alert the department, but composite tax payers are not required to turn in their bills. K S Ananthamurthy, an independent law practitioner who specialises in taxation, says, “Based on the invoices and bills issued, they can calculate their turnover over a quarter and pay five per cent GST to the government. They should, however, maintain their records on a daily or weekly basis.”
Veerendra Kamat, member of Bruhat Bangalore Hotels Association, says, it is easy to suppress the details of the bills.

“If the annual turn over of the restaurant is say `1 crore and `10 lakh, it wouldn’t want to fall into the category of regular tax payers. So, it can easily suppress the billing details.” Regular tax payers would be easily defrauded since they frequent smaller eateries, where this GST fraud is more likely to happen.
Some restaurants in the city may not even have registered for GST. City Express found a bill of a restaurant on CMH Road in Indiranagar that only had a TIN (Taxpayer Identification Number). Ananthamurthy says the TIN number is not valid post GST. “So if you get a bill with just TIN number, then it’s not valid. They must not have upgraded their system. Restaurants with TIN should have been automatically migrated to GST. These restaurants get GST number automatically. They do not have to register again but just provide the basic contact details.”

Where to file complaints about GST?
Y G Muralidharan, a member of Central Consumer Protection Council, says that the consumer can file a complaint at consumer court or send a letter to the commercial tax department with a copy of the bill, in case they find the GST number to be invalid or have been charged extra. “ He adds that GST should not be confused with service charge, which is voluntary.

What is a composition scheme?
A trader, dealer or restaurant with an annual turnover of `1 crore can opt for composition scheme under the GST. The restaurant that has opted for the scheme pays 5 per cent GST to the government and cannot charge consumers the tax.

How to decode the GST number?
The GST number should be a 15-digit number starting with the state code. The state code of Karnataka is 29. Hence, the GST number of all businesses in the state will begin with 29 followed by the 10-digit PAN number and a 3-digit computer generated number. The GST number can be verified online on gstkarnataka.gov.in. Using the TIN number, one can also get the GST number. All the laws and acts related to GST are simplified and available on the website, explains Patil Kulkarni, assistant commissioner, Central Tax and Customs office.