Service valuation restaurent (Service Tax)

This query is : Resolved

( Author )
21 May 2012

http://www.servicetax.gov.in/notifications/notfns-2012/st11-2012.htm

Please see Rule 2C in the above Budget notification.. What effect does it have on the valuation of restaurent service??

Also there is another notifiation which is as follows

http://www.servicetax.gov.in/notifications/notfns-2012/st13-2012.htm

Point 4 of this notification gives abatement..

So then what will be total Service Tax after both these notifications on a Bill of Rs. 10000(Ten thousand)

CA CS Amit S. Kedia

( Expert )
21 May 2012

Dear User,

Service portion in the supply of food or any other article of human consumption or drink at a restaurant- Existing taxable portion was-30%, Proposed taxable portion is-40%

if above service is provided from a premises elsewhere(outdoor catering)-Existing taxable portion- 50%, Proposed taxable portion-60%.

No cenvat credit will be allowed. Earlier it was 70% abatement now it is only 60% and notification 13 is to be reconsidered.

CA Ashwani Agarwal

( Author )
21 May 2012

What do u mean by reconsidered?

Regards

CA.Ganesh

( Expert )
21 May 2012

These notification shall come into force from the date on which section 66B of the Finance Act, 1994 comes into effect

CA CS Amit S. Kedia

( Expert )
21 May 2012

As far as I am aware of that 70% abatement is not correct and will be corrected to 60%. Beceause earlier it was 70% but now it s changed to 60%.

CA CS Amit S. Kedia

( Expert )
21 May 2012

See B.1.18- of D.O.F. No 334/1/2012-TRU- Union Budget 2012: Changes in Service Tax-reg.

CA Nikhil Jhanwar

( Expert )
21 May 2012

The query is why there is two similar provisions for same service of food supply, one under a Notification and another in Valuation Rules. What is logic behind it or purpose of it.....

CA CS Amit S. Kedia

( Expert )
22 May 2012

Dear Mr. Nikhil,

I explained what i have enterpreted and construed from the 2 notifications.
if you can explain it better than you are welcome.

CA Nikhil Jhanwar

( Expert )
22 May 2012

Dear Mr. Amit,

You have got it wrong. I ma not answering the qury. Infact I am also asking this question. I need a simple clarification. It is matter of fact that for particular activity there will be only single provision in the Law. But why for this service of Food supply, there is two similar provisions. ....Because it seems that purpose of both these notifications is same to provide the rates of abatement.

CA CS Amit S. Kedia

( Expert )
22 May 2012

Dear Mr. Nikhil,

That is what I want to explain as at one place abatement of 70% is given and at other place taxable portion 40% is given.
The abatement given in this aspact needs to be reconsidered.

There are other abatements also not provided in this list like

75%/67% abatement in case on construction of complex service.

CA Nikhil Jhanwar

( Expert )
22 May 2012

I have gone through both Notifications and your observation about the rate is right. But Cant the Government merge both the provisions at a single place rather than giving a two places.... May be it happens one they come into effect.

CA Ashwani Agarwal

( Author )
23 May 2012

What do you mean by when they will come into effect?

Arent they in effect from 1 April, 2012.

CA Ashwani Agarwal

( Author )
23 May 2012

What do you mean by when they will come into effect?

Arent they in effect from 1 April, 2012.

CA CS Amit S. Kedia

( Expert )
23 May 2012

No, It is not yet effective. They shall come into force from the date on which section 66B of the Finance Act, 1994 comes into effect.

CA Ashwani Agarwal

( Author )
23 May 2012

Then what is the current rate on Restaurant?

CA CS Amit S. Kedia

( Expert )
23 May 2012

At present, rate are as follows-
1.Service portion in the supply of food or any other article of human consumption or drink at a restaurant- Taxable portion is 30%.

2.S.No.1 provided from a premises elsewhere(outdoor catering)-Taxable portion is 50%.