03 January 2015
We are having a AC Restaurant with seating facility (without serving alcohol) in Delhi. Kindly clarify whether Service Tax is applicable or not in Air Conditioned Restaurant in view of Kerala High Court Order.
03 January 2015
yes AC restaurant are liable to service tax. Initially it was covered in the exemption notification 25/2012 of the finance act, 1994. With effect from 1st July 2012, Section 66E was inserted for introducing the new concept of DECLARED SERVICES under the service tax legislature. According to that, restaurant services were held as declared services. However, Mega Exemption Notification No. 25/2012 entry no. 19 provided that restaurants, eating joints or mess other than those having the facility of air conditioning or central air-heating in any part of the establishment, at any time during the year and a license to serve alcoholic beverages shall be exempt from service tax.
After the Budget of 2013
Subsequently, Notification No. 3/2013 has amended Notification No. 25/2012(Mega exemption) according to which service tax will be levied even on the restaurants which do not have a license to serve alcoholic beverages. This is a major change for the industry as thousands of restaurants and eating joints including small and medium have come within the ambit of Service Tax. The Change was effective from 01/04/13. This change did have a direct impact on the pocket of common man. Due to this change, even a small eating joint having a seating arrangement and the facility of air conditioning in the establishment shall be liable to service tax even if operating in places like hospitals, temples etc. So You are liable to pay service tax
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