Service Tax on Restaurant Service

[ALOK GUPTA]

Service tax on Restaurant service is imposable when a restaurant has license to serve liquor & any part the restaurant has facility of Air Conditioner. In some restaurants,  the license to serve liquor is granted on day to day basis as per their need. In such case, whether the Restaurant has to collect & pay service tax during those specific days only when they had license to serve liquor or they should collect & pay service tax every day.

Following points may be considered before forming an opinion:-

1-If they collect & pay service tax on specific days only and other days go without tax, then the Restaurant owners may misuse this facility  and collection of tax may become discretionary

2-In case the tax is extracted from customers in no-license-days also then it would be against the preliminary condition of tax imposition stipulated in Act & customers are unnecessarily taxed .

Keeping both the factors in mind, please opine the correct way of tax compliance. 

AI Summary

Debate on Service Tax: Should Restaurants with Temporary Liquor Licenses Pay Daily or Only on Licensed Days? A forum discussion revolves around the imposition of service tax on restaurants with a liquor license and air conditioning. The primary question is whether service tax should be collected only on days when a restaurant has a temporary liquor license or every day. One participant argues for tax collection only on licensed days, citing potential misuse but emphasizing government revenue. Another suggests collecting tax daily for simplicity and compliance ease, regardless of license status. Concerns are raised about potential harassment from frequent verification by tax officers. The discussion seeks a balanced approach to tax compliance without undue burden on restaurant owners.