Clearification in Restaurant Service

[MAYUR DODIYA]

Dear Expert

As per Circular No 173/8/2013 – ST TRU dated 7th October,2013:-

(1) In a complex where air conditioned as well as non-air conditioned restaurant is operational but food is sourced from the common kitchen then service tax arise in the non-air conditioned restaurant is exempted.

(2) In a hotel, if services are provided by a specified restaurant in other area e.g. swimming pool or an open area attached to the restaurant then service tax is applicable.

Query:-

One of Restaurant having air conditioned area (air conditioned whole where seating arrangement for customer and food is served) as well as open seating area (Non-air conditioned are where seating arrangement in open area for customer and food is served).

For both, air conditioned as well non-air conditioned (open area) food are supplied from one common kitchen.

Restaurant name is same for both the area. Service Tax number also common.

In view of above circular wether service tax is applicable in non-air conditioned area (Open area)?

AI Summary

Restaurant Service Tax: Pay for Both AC and Non-AC Areas if Sharing Same Name to Avoid Litigation. A query was raised regarding the applicability of service tax in a restaurant with both air-conditioned and non-air-conditioned areas, where food is prepared in a common kitchen. According to a circular, service tax is applicable only to air-conditioned areas if the restaurants are separately named. However, since both areas in question share the same name, experts advised paying service tax on both to avoid litigation. Suggestions included naming the areas differently for tax planning purposes. Another example was given of a restaurant with separate floors for AC and non-AC areas, questioning the service tax applicability for the non-AC area.