Jun 272014
 

SERVICE TAX CLARIFICATION ON RESTAURANT

Article on services provided by a restaurant in relation to food or beverages eating joint or mess other than those having the facility of air conditioned or central air heating in any part of the establishment at any time during the years

As we all know that supply of food or beverages ( in restaurant) is deemed sale ( as per article no. 366 of constitution of India) all deemed sales are outside the scope of service tax as they are liable to VAT, only service charges for supply of food or beverages is taxable under service tax, except the restaurant having the facility of air conditioned or central air heating in any part of the establishment at any time during the years, the restaurant who provide service in relation to food or beverages eating joint or mess having the facility of air conditioned or central air heating in any part of the establishment at any time during the years is liable to service tax.

There are so many doubts on this topic like a complex having both air conditioned and non air conditioned restaurant providing food from the common kitchen does service tax levy on non air conditioned restaurant ?

The clarification is yes service tax is levied on the non air conditioned restaurant also because the restaurant is not separately demarcated, but if the complex having more than one restaurant which are clearly demarcated and separately named and food is provided from the common kitchen, only the service provided in air conditioned restaurant is liable to  service tax , service provided in a non air conditioned restaurant or non centrally air heated restaurant will not liable to service tax and is treated as separate exempt service..

Another doubt in a hotel services provided by a restaurant in other areas like swimming pool or open area attached to the restaurant will liable to service tax ?

The clarification is yes services provided in other areas attached to restaurant are also liable to service tax.

Another doubt whether service tax is leviable on goods sold on MRP basis as part of bill/invoice?

The reply is if the goods sold on MRP basis (fixed under legal metrology Act) they have to be excluded from the total bill to derive at the value of service portion .

One more doubt ,services provided in relation to serving of food or beverage by a canteen in factory covered under factories act 1948 having the facility of air conditioned or central air heating ?

The clarification is No service tax on serving of food by canteen in factory on both the air conditioned canteen as well as non air conditioned canteen .

These doubts can  be explained with the help of an example, suppose we take an example of a 5 star resort and spa in Goa named “Taj Exotica” having more than one restaurant , an air conditioned  Italian food restaurant , a non air conditioned Goan food restaurant and an Indian food restaurant which has air conditioned as well as non air conditioned part not clearly demarcated, but the food is sourced to all the restaurant from the common kitchen, the resort is also having a swimming pool where people can sit and enjoy food, sales counter are also in the resort where goods are sold eg cigarettes, handloom, costumes etc.

The Italian food restaurant (air conditioned) is liable to service tax as the restaurant is serving food or beverages having the facility of air conditioned , another restaurant Goan food(non air conditioned) service tax is not leviable as restaurant is not having the facility of air conditioned, another restaurant serving Indian food( both air conditioned as well as non air conditioned) tax is leviable on the whole restaurant air conditioned as well as non air conditioned because the non air conditioned part is not clearly demarcated and separately named from the air conditioned part , the swimming pool area of the hotel from where the food is sourced through common kitchen is also liable to service tax, now the shops in the resort where goods are sold on MRP basis (if fixed under legal metrology act) are not liable to service tax and value of goods are excluded to derive at the value of service portion .

Another example of chotiwala foods and restaurant in Haridwar , the hotel is having two section air conditioned as well as non air conditioned not clearly demarcated and separately named , the service tax is levied on the whole restaurant because the restaurant is not clearly demarcated and separately named .

So this is the treatment of restaurant service.

Courtesy: Esha Agrawal
Email: agrawalesha6@gmail.com

 

Jun 262014
 

Due dates for the Month of July 2014

05-07-2014
Service Tax
- Service Tax payments by Companies for June
– Service Tax payments by Other than Companies for June
06-07-2014
Central Excise
- Payment of Excise Duty for all Assessees (including SSI Units)
07-07-2014
Income Tax
- TDS Payment for June
10-07-2014
Central Excise
- Filing ER-1 Return (Other than SSI Units)
– Filing Quarterly ER-3 Return by SSI Units availaing small scale exemption
– Filing Quarterly ER-8 Return by the units paying 2% duty
– Filing Quarterly ER-2 Return by 100% EOUs
– Filing Quarterly ER-6 Return by specified class of Assessees regarding principal inputs.
15-07-2014
Income Tax
- TDS / TCS Quarterly Statements (Other than government deductors) April to June
Providend Fund
- PF Payment for June
Central Excise
- Filing Quarterly Return (ANN. 13B) by the registered dealers.
20-07-2014
Central Excise
- Filing Quarterly Return (Annexure 75) by units availing area based exemptions
MVAT
– TDS Payment for June
21-07-2014
ESIC
- ESIC Payment for June
MVAT *
– MVAT Monthly Return for June (TAX>1000000/-)

- MVAT Quarterly Return for April to June (TAX>100000/- and <=1000000/-)
– Monthly & Quarterly Payment till June
30-07-2014
Profession Tax
- Payment of June
Income Tax
- Issue of TDS Certificate Form 16A by non Government deductor for Q1
31-07-2014
Income Tax
- Return of Income and Wealth of non Corporate Assessees.
*If payment of MVAT made as per time prescribed, additional 10 days are given for uploading e-return
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