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Pizza hut and dominos-vat & service tax

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Querist : Anonymous

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Querist : Anonymous (Querist)
30 October 2013 why does pizza hut and dominos charges both service tax 12.36% & VAT 4%?
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Suresh Ramaswamy

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Suresh Ramaswamy (Expert)
30 October 2013 There are two aspects to the business of a restaurant. VAT is a state subject and the rates vary from state to state in India. Service Tax is a Central Subject and is levied by the Union Government and is applicable at the same rate all over India.

The restaurant sells the food items served and this is a sale of goods or commodities. On the value of such sale of goods or commodities state VAT is applicable - in your problem @4%.

With effect from 01.04.2012, any air conditioned restaurant is rendering taxable service and is liable to service tax under the head 'Restaurant Services." Service tax is however leviable @ 12.36% on 40% of the bill since there is an abatement of 60% for "Restaurant Service".
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