Service tax on a/c restaurants

Basic exemption limit is Rs. 10 Lacs, if the aggregate value of taxable service during the preceding FY does not exceed Rs. 10 Lacs. N/N-33/2012 dt. 20-6-12. However, as per valuation Rules, 2006, the value of service in case of AC restaurants is 40% of total bill value. So, effectively, if the total turnover is less than Rs. 25 Lacs, the value of service portion is less than Rs. 10 Lacs.