service tax on Restaurant Service

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Querist : Anonymous

Querist : Anonymous (Querist)

26 May 2011 Service tax shall be levied on two condition on restaurant service. first AC furnished and second one is LICENSE to SERVE the Liquor.

the question is whether service tax shall be levied on Temperory licence also???

Like we only provide service of liquor when customer give us L-49.

kindly answered asap.

U S Sharma

U S Sharma (Expert)
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26 May 2011 if the resturent serves liquer on L-49 even, that means they have stock of liquer, which can not be done without licence.

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Querist : Anonymous

Querist : Anonymous (Querist)

27 May 2011 bt. sir yha notification to license to serve ka h.

rather we arrange bar for client bt. license to serve still we havn't have on our name.

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CA.Abhijit Das

CA.Abhijit Das (Expert)
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27 May 2011 THE SCOPE OF ST UNDER RESTAURANT ...Restaurants provide a number of services normally in combination with the meal and/or beverage for a consolidated charge. These services relate to the use of restaurant space and furniture, air-conditioning, well-trained waiters, linen, cutlery and crockery, music, live or otherwise, or a dance floor. The customer also has the benefit of personalized service by indicating his preference for certain ingredients e.g. salt, chilies, onion, garlic or oil. The extent and quality of services available in a restaurant is directly reflected in the margin charged over the direct costs. It is thus not uncommon to notice even packaged products being sold at prices far in excess of the MRP.

In certain restaurants the owners get into revenue-sharing arrangements with another person, who takes the responsibility of preparation of food, with his own materials and ingredients, while the owner takes responsibility for making the space available, its decoration, furniture, cutlery, crockery and music etc. The total bill, which is composite, is shared between the two parties in terms of the contract. Here the consideration for services provided by the restaurants is more clearly demarcated.

Another arrangement is whereby the restaurant separates a certain portion of the bill as service charge. This amount is meant to be shared amongst the staff who attends the customers. Though this amount is exclusively for the services it does not represent the full of value of all services rendered by the restaurants.

The new levy is directed at services provided by high-end restaurants that are air-conditioned and have license to serve liquor. Such restaurants provide conditions and ambience in a manner that service provided may assume predominance over the food in many situations. It should not be confused with mere sale of food at any eating house, where such services are materially absent or so minimal that it will be difficult to establish that any service in any meaningful way is being provided.

It is not necessary that the facility of air-conditioning is available round the year. If the facility is available at any time during the financial year the conditions for the levy shall be met.

The levy is intended to be confined to the value of services contained in the composite contract and shall not cover either the meal portion in the composite contract or mere sale of food by way of pick-up or home delivery, as also goods sold at MRP. On this service 70% abatement is available, thus effective tax would be at 30% of Normal rate. Such abatement is, inter-alia, meant to separate such portion of the bill as relates to the deemed sale of meals and beverages. The exemption is available provided no Cenvat credit is availed either of inputs or input services. It is clarified that the exemption is available on the gross price charged by the restaurant for the taxable service, including any portion shown separately e.g. service charge. However the amount paid by the customer ex-gratia e.g. as tip to any member of the staff doesn’t constitute consideration paid to the restaurant and shall remain outside this levy..

Querist : Anonymous

Querist : Anonymous (Querist)

28 May 2011 thanx abhi...i already read it. bro conclusive answer b de dete.