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

Service tax on restaurant service: chargeable when licence to serve alcohol and air conditioning coincide, affecting daily compliance.
Chargeability of service tax on restaurant services depends on concurrence of an Air Conditioned facility and a licence to serve alcoholic beverages; one position limits collection to days when the licence is held, requiring cross verification with excise records, while a practical alternative recommends collecting and remitting tax on all days to simplify compliance despite potentially taxing some unlicensed days.