29 November 2012
Can VAT be levied on service charges charged by restaurants. If yes doesn't it contradict with the basic idea of VAT being charged on value addition. Provide link to the act if possible. Thanks
29 November 2012
I'm asking that when there is no value addition in serving food why would VAT be applicable? Neither i am talking about people opting composite scheme nor the different state rules
29 November 2012
There is Value Addition... are You Selling Products on Your Cost.... Say on Drinks Thumsup Purchase at 11 and Selling at 12. then it is value addition ...
Levy of tax on food and drinks: Every dealer shall pay tax on the sale of ready to eat unbranded foods including sweets, savories, unbranded non alcoholic drinks and beverages served in or catered indoors or outdoors by star hotels recognized as such by Tourism Department of the State Government or Government of India and restaurants attached to such hotels at the rate of 12.5% of the taxable turnover; Every dealer other than those mentioned in the previous para shall pay tax on the sale of ready to eat un-branded foods including sweets, savories, un-branded non alcoholic drinks and beverages served in or catered indoors or outdoors by hotels, restaurants, sweet halls, clubs, caterers and any other eating houses at the rate of 4% of the taxable turnover. The dealers are entitled to input tax credit on the goods specified in the First Schedule purchased by him in the State.
29 November 2012
If your buying thumbs up for rs 11 and selling it for rs 12 you are directly paying VAT on the bill at the rate of 12.5%. My concern is the service charge which is added separately in the end and then total amount is charged to VAT. For Ex: BILL Food and drinks Rs 100 Service Charge Rs 10
Add: VAT @ 12.5% Rs 13.75
In the above example you are charging VAT on food and drinks but in addition you are charging VAT on Service Charge which you have charged because you have provided services from the kitchen to the dinner table etc.
29 November 2012
In Indian Railways Catering and Tourism Corporation Ltd. (IRCTC) v. Govt of NCT of Delhi (2011) 9 taxmann.com 258 = 30 STT 479 = 5 GST 545 = 32 VST 162 (Del HC DB), IRCTC was supplying food articles to Indian Railways. It was held that contract for supply of food by IRCTC to Indian Railways was contract for sale of goods.Sale takes place when goods (food articles) are loaded in train. State Vat/sales tax can be levied on entire transaction. It was held that service tax can be levied on outdoor catering, but in present case, the contract between IRCTC and Indian Railways is for sale of goods and not outdoor catering service.
29 November 2012
The judgement of the case clears that providing of food on train is not providing services instead it is sales of good. The case was in reference to charging composite rent from the passengers. According to the case ST cannot be charged when VAT is chargeable and vice versa. The case is not relevant in respect of my question whether service charge is to be considered as sales.
29 November 2012
on Service Charges No VAT is Chargeable.... on That ST is Chargeable.... if You can able to Bifurgate the service part and goods part....
29 November 2012
Since you have come a long way.... a small poser: Lodges charging "service charges" is a common practice... but please let me know the RESTAURANT charging "service charge" as enumerated by you in the above example of Food and drinks100 and service charge 10... It could be room service charge... serving outside licquor service charge or like item...
29 November 2012
Mr Amol i made it pretty clear in my question that i'm not talking about renting a room and all because i used the word "restaurant" not a "hotel" I'm just talking about dining in a restaurant
29 November 2012
Appreciate if you could cite the name of such RESTAURANT. amolshankar@gmail.com may be used if you want to keep the name SECRET, in general
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