Vat and service tax on the same amount whether chargeable?

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 May 2013 Dear
I am registered under Supply of Foods and Beverages.By applying Rule 2C i can claim an abatement of 60% i.e i have to pay service tax on remaining 40%. My lawyer suggested me to charge service tax on 40% and vat on the remaining portion i.e on 60%. he is giving an explanation that vat should not be charged on that amount on which service tax has already been charged for this he has also given a reference of case law of Imagic Creative Pvt. ltd. vs Commissioner of Commercial Taxes. He now advice me to make bill as

FOOD & BEVERAGES 1000.00
SERVICE CHARGES@ 20% 200.00
TOTAL 1200.00
LESS: ABATEMENT 720.00
TOTAL 480.00
SERVICE TAX@12.36 59.33
VAT@ 14.30% ON ABATEMENT 102.96
TOTAL AMOUNT(TOTAL+ST+VAT) 1362.29

BUT I FEEL THE ABOVE THING TOLD BY MY LAWYER IS INCORRECT AS BILLS MADE IN DIFFERENT RESTAURANTS ARE LIKE THIS

FOOD & BEVERAGES 1000.00
SERVICE CHARGES@ 20% 200.00
TOTAL 1200.00
LESS: ABATEMENT 720.00
TOTAL 480.00
SERVICE TAX@12.36 59.33
VAT@ 14.30% ON 1200 171.60
TOTAL AMOUNT(TOTAL+ST+VAT) 1430.93

PLEASE SUGGEST

CA Vikas Acharya

CA Vikas Acharya (Expert)

16 May 2013 your question is basically vat on total or abated part.
this need to be checked as per specific vat law, though in most of the restaurants it is charged on whole value.
logically it should be only on abated part, but treatment will be as per state law. if state law is silent and no such notification or case law, then 2nd method is better to avoid litigation

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