Service tax on restaurants

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ATUL U ANAVEKAR (Querist)
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04 December 2011 According to zzzzv of section 65(105), air conditioned restaurants serving liquor are subject to service tax with abatement of 70%.

If a restaurant is divided into two, one with air conditioning serving liqour and the other division without air condition and wihtout liquor with separate billing system, will the service tax aply to both divisions or only one.

CA Gunjan H Shah

CA Gunjan H Shah (Expert)
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05 December 2011 According to Section 65 (105) (zzzzv) taxable service means any service provided or to provided to any person, by a restaurant, by whatever name called, having the facility of air-conditioning in any part of the establishment, at any time during the financial year, which has licence to serve alcoholic beverages, in relation to serving of food or beverage, including alcoholic beverages or both, in its premises;

So taxability is there only if there is licence to serve alcohol.

However damaging part for you might be the phrase of the definition... "having the facility of air-conditioning in any part of the establishment" . Thus, apparently it would be taxable.

However AC area and Non-AC area are run by two different assessee then there cannot be Service Tax.

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ATUL U ANAVEKAR

ATUL U ANAVEKAR (Querist)
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05 December 2011 Thanks for your valuable suggestion

CA Gunjan H Shah

CA Gunjan H Shah (Expert)
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05 December 2011 You are welcome.

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