Facts of the Case:
Mr. A is the owner of two restaurants adjoining to each other i.e. “ABC” without Aircondition Facility (Non AC) and “XYZ” providing Aircondition Facility (AC). Mr. A is registered with Service Tax Department and regularly pays Service Tax under Restaurant Service. Both the restaurants have separate entry but the food is served in both restaurants from the common kitchen. The annual turnover of ABC Restaurant (Non AC) is Rs. 15 Lakhs and that of XYZ Restaurant (AC) is Rs. 5 Lakhs. Currently, currently Mr. A is paying Service Tax on Rs. 20 Lakhs (Rs. 15 Lakhs of Non AC Restaurant +Rs. 5 Lakhs of AC Restaurant).
Recently, a Circular vide No. 173/8/2013 – ST was issued by CBEC giving clarification on doubts and questions about Service Tax on Restaurant Service, wherein it is clarified that “Services provided in relation to serving of food or beverages by a restaurant, eating joint or mess, having the facility of air conditioning or central air heating in any part of the establishment, at any time during the year (hereinafter referred as ‘specified restaurant’) attracts service tax. In a complex, if there is more than one restaurant, which are clearly demarcated and separately named but food is sourced from a common kitchen, only the service provided in the specified restaurant is liable to service tax and service provided in a non air-conditioned or non centrally air- heated restaurant will not be liable to service tax. In such cases, service provided in the non air-conditioned / non-centrally air-heated restaurant will be treated as exempted service and credit entitlement will be as per the Cenvat Credit Rules.”
Query:
1. Is this circular applicable to Mr. A?
2. Whether Mr. A is liable to pay Service Tax on turnover of XYZ Restaurant (AC) only i.e. Rs. 5 Lakhs or on turnover of both the restaurants i.e. Rs. 20 Lakhs?
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