Service tax in restaurants

Queries 3480 views 5 replies

Hi,

I went to a Restaurant in Hyderabad which has air-conditioning and serves alcohol. WE had food there but didnt consume alcohol.

On our bill they levied VAT 14.5% + Ser Tax 5% + Service Charge 10% which seemed very absurd to me. Just wanted to clarify if this is OK or not.

 

Thanks & Regards,

Nikhil

Replies (5)

Yes, it was proposed to levy service tax on hotels and resturants vide notification 29/2011.

Restaurants charged service tax on service charges

AND

Restaurants charged vat on food

Service charges is renumeration for service it doesnt form part of tax.

Service tax of 5% may be charged because the person is rendering both taxable services as well as exempted services             

         If separate accounts are not maintained, the provider of output service shall pay an amount equal to 5% percent of value of exempted goods and exempted services; or pay an amount as determined under sub-rule (3A); or in relation to provision of exempted services; subject to the conditions specified in sub-rule (3A) ibid. (Ref. Rule 6(3 & 3A) of Cenvat Credit Rules, 2004 read with Not.No.3/2011 CE (NT) dt.1.03.2011)

Divya, the amount of 5 % tax which you are saying is the tax that the company has to pay under CCR, 2004. In no stretch of imagination can this be recovered from the customers. It has to be paid by the service provider for the purpose of availing Credit on the Common Input services. So, the burden cannot be passed to the customers. In th epresent case the service provider has availed an abatement of 60 %. Hence, they have charged ST @ 5% i.e 12.36*0.4. Hope it clarifies the doubts of all.

ya, i agree with ajit kumarji...,

hello sir i just wanted to know that service tax charged on bills in restaurants is on total ammount including service charge or only on service charge ammount

for eg

total food bill = 1000

service tax 10% = 100

 what i wanted to know tht serivce tax shud be charged on 100 or on total ammount 1100

reply as soon as possible


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