Delhiites restaurant owners want clear policy after rooftop operations sealing

With just days to go for the Lok Sabha polls in Delhi, restaurateurs in the national capital hope the new government will work to revive the eating-out sector, which took a hit following the sealing of rooftop operations. Reintroduction of input tax credit (ITC), eased licensing norms, a clear policy for the sector, and bringing down the legal drinking age to 18 are some other things that the industry hopes for.

Restaurateurs said their profits slumped after civic bodies sealed portions of restaurants in commercial hubs of Connaught Place, Khan Market and Hauz Khas Village in 2017 for running rooftop operations. Priyank Sukhija, who owns restaurants like Lord of the Drinks and Warehouse Cafe in Connaught Place, claimed the New Delhi Municipal Council (NDMC) action led to a 40 per cent decline in business of restaurants in the area.

"There was a time when CP was becoming a hub for restaurants but now no new restaurants are coming up here. The crowd is there but restaurateurs do not want to venture into CP," he said. "I had to sack 150 people across six of my restaurants in CP after the rooftops were closed by NDMC. We have given stability certificates to NDMC but we have been bearing the brunt since a portion of a building in C block, above Jain Book Depot, caved in," he added.

Like Connaught Place, restaurants in Khan Market also bore the brunt of sealing. The business of restaurants in Hauz Khas Village was also hit by sealing of rooftop operations, multiple raids, parking issues, lack of fire safety measures and traffic congestion.

The government's decision to scrap ITC in November 2017 dealt another blow to the sector. It was accompanied by a cut in Goods and Services Tax (GST) from 18 to 5 per cent for restaurants. Owner of QBA, a resto-bar in Connaught Place, Atul Kapur, said, the reintroduction of ITC is one of the central issues for restaurateurs.

"Unlike other businesses, we pay GST but do not get the input tax credit, which pushes our costs higher. The issue has been taken up with the government but nothing has been done yet," he said. Sukhija echoed similar sentiments.

"Even five-star hotels are getting input tax credit but we are not getting it. I am putting my money through cheques, which means I am at a loss, while those who are functioning entirely through cash are safe. We have made numerous appeals to the GST Council but our appeals have fallen on deaf ears," he said. Before the introduction of GST, those buying goods for their businesses had to pay input tax and they were also supposed to pay output tax while selling them.

The ITC mechanism was introduced to avoid double tax payment. Under the mechanism, the tax paid on input was deducted from the tax payable on output. President of the National Restaurant Association of India, Rahul Singh, said there should be two GST slabs.

"Restaurants should have the option of choosing from two GST slabs -- the present five per cent without ITC or 12 per cent with ITC. If the option of two slabs is not possible, then ITC should at least be permitted on rent. Liquor should be brought under the ambit of GST and not doing so defeats the very purpose of bringing in a uniform single (tax) structure," he said. Restaurant owners also want a clear and fixed policy for governing the sector.

"We strongly believe that whatever law is made should be followed and it should not keep changing. There has to be a stable policy about everything and there has to be clarity on each point about what the norms are and what needs to be followed how," said Kabir Suri, founder of dining chain operator Azure Hospitality Group, which runs Mamagoto restaurants. "Delhi being a Union Territory remains no man's land, police reports to the Centre but the excise department reports to the state government. What needs to be done from where becomes an issue for us," he added.

Sukhija said the process of getting a license can take several months to be completed. Joy Singh, an owner of Raasta, which was earlier located in Hauz Khas and shifted to Green Park over a year ago, said a single license window would help the restaurant industry.

Speaking about the legal drinking age in India, Kapur said lowering it has been a long-pending demand of the industry. He pointed out that in many foreign countries the legal drinking age is 17 or 18. According to the current norms in India, any restaurant selling alcohol to a person below the age of 25 can lose its license.

(With inputs from agencies.)