Vat and service tax on pizza ! !

because they are providing both goods as well as services..

the rule reads as follows

3.  In rule 2B of the said rules, after rule 2B, the following rule shall be inserted, namely:-

“2C. Determination of value of taxable service involved in supply of food and drinks in a restaurant or as outdoor catering.- Subject to the provisions of section 67, the value of taxable service involved in the supply of food or drinks for consumption either in a restaurant or as outdoor catering service, either by itself or along with other services, shall be the percentage of total amount, specified in column 3 against the respective descripttion of services mentioned in the following Table:-

Table

Explanation 1.- For the purposes of this rule, “total amount” means the sum total of the gross amount and the value of all goods, excluding the value added tax, if any, levied on goods or services supplied free of cost for use in or in relation to the supply of food or any other article of human consumption or any drink, under the same contract or any other contract:

            Provided that where the value of goods or services supplied free of cost is not ascertainable, the same shall be determined on the basis of the fair market value of the goods or services that have closely available resemblance.

:

VAT is payable on sale of any goods. Supply of Food & drinks is listed as declared goods in Section 66E of Finance Act, 1994 tax and hence they are subject to Service Tax.

However, notification no.25/2012 dated 20-6-2012 provides exemption for supply at places other than those having air conditioning or having license to serve liquor. In view of this, a hotel having air conditioning or having license to serve liquor would be liable for service tax. 

Ms. Pooja Agarwal has rightly provided the material with respect to determination of value for levy of service tax.

Originally posted by : CA Pooja Agarwal

Agreed...