Service tax on event management including catering

[Guest]

Dear Sir,

My bill to the client for conduction event is 1000000. I provided many services including catering. Catering bill is around 600000. Now my confusion is this that  how much is the service tax to be charged ????. As per client they say it will be on 70 percent of total bill as catering is included. For catering i hired a caterer who charged me service tax on 60 percent of the amount and rest he charged me VAT.

So solve this problem with your expertise.

[Guest]

waiting for reply

[Rajesh Nathoo]

Dear Mr. Kalsi,

Your Cateror has correctly charged u Service Tax on 60 percent of billed amount . He has charged ST as per Rule 2C of Sevice Tax ( Determination of Valuation Rules ) ,2006.

Your case is different , u are not a cateror , u are  an event manager . Law has to be read harmoniously to solve ur problem.

If remaining 4,00,000/- includes rent of premises , you can safely charge Service Tax on 70 percent of 10,00,000/- as prescribed under N.T. 26/2012.

However if rent of premises ( least possible) is not included  , Section 66F (3)  will come into picture . If various elements of service are naturally bundled in ordinary course of business, it shall be treated as provision of single service which gives such bundle its essential character .

Now problem starts , ur case has become complicated .

Essential Character of your Service is Event Management which will be taxed at full rate . i.e . 12.36 percent on 10,00,000/-.

.

 

AI Summary

Event Manager Must Apply 12.36% Service Tax on Full Amount Despite Catering Taxation Under Rule 2C An event manager sought advice on calculating service tax for an event bill totaling 1,000,000, which included 600,000 for catering. The client suggested taxing 70% of the total bill due to the catering component. A caterer had already charged service tax on 60% of their bill, with the remainder subject to VAT. An expert clarified that while the caterer correctly applied service tax under Rule 2C, the event manager's service should be taxed at the full rate of 12.36% on the entire amount, as the primary service is event management, which is taxed differently.