Service tax levied by restaurants on totally food bill ?

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b.sreenivasa rao

Employee

139 Points Posted on 05 November 2014

Hi Friends,

I would like to know whether Service Tax amount on Food items levied on Services charges or Total Food items.

I could not understand the above clarification. Because I come to know that service tax is levied on service charges only. But some hotels and Restaurants will levy service Tax on total food items.

My Query:

1) Why should they mention Service charges if they have collected Service Tax on Total Food item

2) And also they collect VAT on the Total Food item.

I am herewith attaching bill which I recently purchased some food items.

Regards

Sreenivasa Rao B

Attached File : 100323 1378390 service tax on food items.pdf downloaded: 178 times

Replies (2)

Manoj Agarwal

Service Tax Consultant Rourkela Service

2755 Points Posted on 05 November 2014

If the restaurant is charging service tax @ 4.944% (i.e. 12.36% of 40% deemed value of service) of the total bill amount (excluding VAT), then it is as per law. Article 366(29A) of the Constitution of India allows VAT and Service Tax, both to be levied in case of supply of food, drinks etc for human consumption. Though the restaurants charge VAT on the total Bill amount, they should charge VAT only on the 60% portion of the Bill.