Service Tax on AC restaurant

I have some question on restaurant service:

1. As per Service Tax rule, in an AC restaurant, 40% of the food cost is considered as service charge. So service Tax = 40% of the food cost X 14% service tax. Whereas for claiming of VAT, 100% is considered as food cost and accordingly VAT charge. That means total tax taken on 140% of the food cost. If the service part is 40% of the food cost, why VAT will not be charged on 60% of the food cost instead of 100%?

2. If the food is purchased as a parcel item and taken away from the restaurant, why should service tax to be given (as the restaurant service has not been used)? Whereas most of the restaurent charge Service tax for both parcel item as well as served item.

3. Whats about non-AC restuarant? Is it clearly defined? more  

View all 52 comments Below 52 comments
1. overcharging on two heads. It is unfair that for food consumed at Rs. 100/- is treated as Rs. 140/- for tax purposes.
2. Even non AC restaurants charge same rates. more  
If both the govt. stand rigid at their position, I think we should have to go for a judiciary opinion, preferably from SC. more  
as i was told long back before VAT came that VAT will be charged only on the cost excluding materials on which it has been charged earliar, then MRP FIXED otherwise vat over vat we pay, how much govt, gets to loot from public to increase MP/MLA PAY ALLOWANCES etc by taxes over taxes JAY HIND more  
Valid point and the taxes should be looked after for Take Away billing. more  
Non AC Restaurants no Service Tax is levied as it is exempt. This issue has been taken up with the Finance Minister but he has chosen to ignore it, which has lead to such practices. Constitution of India prescribes that the entire value charged by a restaurant be charged only to VAT and no Service Tax should be levied on such value. Similarly, no service tax is to be levied on take away and home delivery. However, the Central Government officials have issue instructions to levy service tax on 40% of the value on all transactions. State Governments have given instructions to levy VAT on the entire value even when service tax is being levied on 40% of the value. Service Tax and VAT are mutually exclusive and cannot be levied on the same value.

The turf war between the State Revenue officers and Central Government Revenue Officer is resulting in unconstitutional levy, which Finance Minister of India is well aware of. more  
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