Hotels are covered under "Convention Service" or "Mandap Keeper Service"(note that since they cater at their OWN premises, outdoor catering service is not attracted).
Under the above 2 services, hotels can take an abatement(viz charge service tax on 40% of the bill value). However, many simply do not bother or care to do so.
Regarding VAT, the normal VAT rate of 12.5% is applicable on hotel food. This is over & above luxury tax etc if any applicable.