In a lesson to the hotel and restaurant industry

Anil (Querist) 05 December 2014 This query is : Resolved
Respected All

It is common trend across NCR Eateries / restaurant industry to charge Service Tax + Vat. Can I file a consumer case basis this judgement in gurgaon as Why service charge is being levyed in restaurant?
Please read the judgement news article.

http://timesofindia.indiatimes.com/city/chandigarh/123-yr-old-pays-Rs-8-extra-earns-Rs-6000-from-cafe/articleshow/45266056.cms

Thanks

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Devajyoti Barman (Expert) 06 December 2014
Meer a local lawyer and consult with him. We do not advise on the basis of news articles.

P. Venu (Expert) 06 December 2014
The High Court of Kerala had held the charging of such taxes to be unconstitutional.

Guest (Expert) 06 December 2014
Why not? Try your luck also like the lucky boy having earned Rs.6,000 by paying mere Rs.8 as VAT.

Best of luck!

malipeddi jaggarao (Expert) 06 December 2014
Service Tax is different and Service Charges are different. Service Tax is payable to Central Government by the Restaurants and they pass on this load on to the customers and they are right. In the case quoted by you, it is service charge. Do not confuse yourself. However, one can cross-check whether the service tax levied on each bill is truly being remitted to the Government or not. Every Hotel and Restaurant is supposed register for payment of Service Tax with Central Excise Department and they have to remit the tax thus collected monthly by filing monthly returns. Some Hotels though they collect this tax from the customers, they do not register themselves and they do not pay the Service Tax. If you are interested, you can check-up with Central Excise Department of that particular area wherein the restaurant operates as to whether they are remitting this tax every month or not and if they do not, you can make a complaint with the Department.

Rajendra K Goyal (Expert) 06 December 2014
AC restaurant can charge service tax. This service tax goes to Govt of India. The service tax is payable on the bill amount and service charge.
Service tax is only applicable on 40% of the bill amount, not the total amount. As the service tax is around 12.36% at the moment, the final tax you need to pay is only 4.944% (12.5% X 40%) on the bill (inclusive of service charge).