Can vat and service tax be levied on the same amount?

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Querist : Anonymous

Querist : Anonymous (Querist)

07 October 2016 Dear Sirs,

We all know that in case of restaurants both VAT and Service Tax are levied in some cases.

My question is this: Suppose, we buy a food item of Rs.500 at a restaurant. The bill given is like this:

Rs.500 (Basic amount) + 15% VAT on full basic amount of Rs.500 + 6% Service tax on full basic amount of Rs.500

I think, this is the case of double taxation on the SAME amount of Rs.500/-

In my opinion, VAT should be charged on 60% amount (500 * 60% = 300) and Service tax should be charged on 40% amount (500 * 40% = 200).

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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07 October 2016 With regard to service tax you are right, take up the issue with the restaurant that abatement of 60% is available and they can charge service tax on 40% value only. You are also right on VAT but it is not followed. Once GST comes this will not happen.

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Querist : Anonymous

Querist : Anonymous (Querist)

08 October 2016 Thank you sir. I would also like to opinions of other experts.

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Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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23 October 2016 The charges levied are as per law. Service tax is a central levy on restaurant services @ 15 %. An abatement of 60 % is allowed and on the balance 40% tax is levied which works out @ 6% of the total bill. VAT is a state levy applicable on food and non alcoholic drinks and hence correctly charged.

As stated by Mr. Seetaraman once SGT kicks in there will be a single levy only.