TaxTMI 
TaxTMI 
my client is providng outdoor catering service. he has been availing 50% abatement under notf. no.1/2006. Now receipient of service willing to change the contract/agreement bifurcating the cost of food/meal say Rs. 45 and service element say Rs. 5/- per meal/food/lunch. In that case, we have to charge service tax only on Rs.5 @12.36%. Heitherto we had to charge 50% of gross ( Rs.50/-)=25*12.36%. Is the agreement valid ? and can he do so?
Chargiability of service tax
OM PRAKASH
Catering Service Tax: Separate Food and Service Charges for Abatement; Notification 12/2003 Exempts Food Portion if Bifurcated. A client providing outdoor catering services has been availing a 50% abatement under notification 1/2006 for service tax. The service recipient wants to change the contract to separate the cost of food and service, charging service tax only on the service portion. One expert suggests that the total value, including food, should be considered for abatement, but if the cost is bifurcated and billed separately, the food portion can be exempt under notification 12/2003, with service tax on the service portion. Another expert agrees, noting that if VAT is paid on food, the deduction is valid. (AI Summary)