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)?

[Guest]

Dear,

 

Wordings of clarification is:-

In a complex where air-conditioned as well as non-air-conditioned restaurants are operational and

which are clearly demarcatedand

separately named ,but food is sourced from the common kitchen, tax to be paid only on service rendered from air-conditioned restaurant.

 

As you saying in ur info, name is same, its good to pay tax to avoid unnecessary litigation.

 

 

[Brijesh Verma]

Strictly speaking, the view adopted by my Ld. brother Mr. Sehrawat seems correct.

However, you may also note the following relevant aspects:

1. An exemption Notification is to be construed in a more lenient manner.

2. In your case the restaurants are clearly demarcated but they are not separately named.

3. You can name them as XYZ- AC and XYZ non-AC which is a legal measure of tax planning (and not evasion).

4. Through this you can retain the original name as well as you can satisfy the condition of having different names

 

[Rakesh A]

Dear Sir,

If there is a restaurant which has Ground Floor Non AC Self Service Area and a First Floor AC Service Area. The entire restaurant is run under one Name, PAN, TIN, PF and ESIC registration. In such a case does Service Tax Apply to the Ground floor Non AC Self Service Area also.

Regards

Rakesh

AI Summary

Service tax exemption for non-air-conditioned dining depends on clear demarcation and separate naming to avoid taxation. Exemption for non-air-conditioned dining supplied from a common kitchen applies only when the air-conditioned and non-air-conditioned restaurants are clearly demarcated and separately named; if they operate under the same name, tax is chargeable on services from the air-conditioned portion. To meet the condition, entities may adopt distinct names for the two areas, and advisers cautioned that failing clear demarcation or separate naming may invite tax liability or suggest paying tax to avoid litigation.