Restaurant charging service charge but no service tax or vat
akash
(Querist) 07 January 2013
This query is : Resolved
Experts,
I ordered from a local restaurant and was surprised to see that the bill contained a 10% service charge (which is not enforced by the government), but there was no VAT or service tax. Is this legal? If not, who should this be reported to, and can this be done online if I send a scanned copy of the bill?
Just to clarify, this wasn't a kuccha bill but a proper computerized bill.
Thanks
Raj Kumar Makkad
(Expert) 07 January 2013
Service tax has duly been charged as the same is imposed on hotels.
Anirudh
(Expert) 07 January 2013
Dear Mr. Akash,
Please come with more facts.
What did you order?
The answer to your query will depend upon the same.
Raj Kumar Makkad
(Expert) 07 January 2013
*Anuradha! The sole query is whether service tax is imposed on the customer of hotels or not.
So reply now as you desire.
akash
(Querist) 08 January 2013
I ordered north indian food (like dal, roti etc). My query is shouldn't VAT and service tax be imposed on the bill or is there some condition under which the restaurant can escape these?
Anirudh
(Expert) 08 January 2013
It is pure sale of eatables. On that there is no VAT payable.
When they put service charges of 10% without any bifurcation between service charges and service tax separately, it will be treated as cum-service tax.
Dear Mr. Makkad,
Your understanding of the import of the query is not correct. Without knowing what the person ordered, one cannot come to a right conclusion. For instance, if he had ordered for Namkeen items or Sweet Items (other than roti, dal etc.) naturally VAT is chargeable. Otherwise it is not. Therefore, it is necessary to obtain the facts correctly, to provide an appropriate answer to the query.
akash
(Querist) 08 January 2013
Thanks Mr Anirudh, I am under the impression that all restaurants have to charge VAT. How come McDonalds and Dominos charge 12.5% VAT in Delhi in that case?
Anirudh
(Expert) 08 January 2013
As already indicated it depends upon whether the items being supplied by them fall under the category of 'Namkeen', 'Sweets' etc. Roti, Chaval etc., does not fall under any of these categories and hence would go without VAT. Not other items.
RAJU O.F.,
(Expert) 08 January 2013
The hotel might have charged cost of food plus cost of serving and servicing you while enjoying food. If the total cost is high and food is not of that standard, don't go to that hotel. Normally star hotels charge service tax; others don't, or include in cost of food. This need not be a big issue, when hundreds of other issues are prevailing.
Raj Kumar Makkad
(Expert) 08 January 2013
Raju! The matter here is not of the standard of the hotel of deficiency in its service rather of the service tax and VAT and do appreciate Anirudh for his logical reply.
R.venkatesh Naidu
(Expert) 15 January 2013
i discussed my accountant then give the reply
Raj Kumar Makkad
(Expert) 15 January 2013
Naidu! At least I shall wait reply from your side.
