Convention Services - Help for the tax structure

This query is : Resolved

Sunil Bagade (Querist)
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01 April 2009 Dear Sir / Madam

Greetings of the Day !

My company carries the Hospitality Business & have Service Apartments Hotels.

We need the opinion on the following points regarding the service tax.

Present Tax Structure for the Banquet hall with the food supply

PRESENT TAX STRUCTURE FOR BANQUETS
PARTICULARS AMOUNT SERVICE CHG. SERVICE TAX VAT TOTAL TAX INCL. SERVICE CHGS
FOOD 100.00 5.00 6.48 13.13 24.61%
SOFTDRINK 100.00 5.00 6.48 13.13 24.61%
LIQOUR 100.00 5.00 6.48 21.00 32.48%
MISC. 100.00 5.00 10.81 0.00 15.81%

• 40% abetment is taken on F & B for Service Tax.
• Vat charged on Full F & B including service charge
• No abetment is taken on Misc. under convention

In the above case the total tax comes to 24.61% on F&B & 32.48% on liquor which is very high.
Even we cannot take Service Tax Input Credit being the abatement taken.

We need the opinion in the above case:

• Can we make one bill defining the service (hall rental) & food sale with the respective taxes ?

• What will be the basis for service : sale ?

• Can we split the bill for service (hall rental) & food sale? If we can split the bill what will be the basis for services : sale.

• In case of Out Door Catering what will be the tax structure.
• Can we take input credit on misc., its been fully taxed

Please reply with the details so that all the confusion gets over. Thanks in advance

Dayal

Dayal (Expert)
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01 April 2009 Ideally you are covered under Convention services where catering is also provided which restricts 40 per cent abatement on service tax.

Out door catering will not cover your services since you are also renting apartment which becomes a composite service altogather.

In case of out door catering the tax structure is that you are entitled to 50% abatement.

No you cannot take credit as it is a part of service and not a separate service, if at all you want to take, then there is no service which covers Misc…. service income.

We do not understand why you have been paying full tax on Misc, when it is a part of service, you can club the expense under any of your heads

Under MVAT, service vat is not payable on the service tax element. If you are located other than in Maharashtra you need to check the provisions accordingly.

The above clarification is NOT provided as a legal opinion. Individual organizations are encouraged to seek professional consultancy from their respective lawyers.