Please Help: service Tax on resturants
Posted Date : 08-May-2012 , 11:16:47 am | Posted By: Rishabh Upadhyay
Category :
Service Tax | Answers :
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From the AY 2011 service tax was implemented on resturants having Airconditioner and serving beverages. Also an abatement of 70% was provided. My queries are: A) will the service tax be charged from the first sale or it will be exepmted till Rs. 10 lack?? B)In case the limit of 10 lacks applies, then will the cosr=t of food be included in it?? C) will input credit be available in case assessee is taking the benifit of this abatement of 70%?? please provide concrete and comprehensive replies |
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Answers:
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 Answer by: PRIYANKA |
| Hello rishabh, a) service tax would be levied from the very first sale, once u take registration with the service tax department, u r liable to pay service tax on even a single rupee sale. no exemption is allowed thereafter. b) i hope second question answer is already answered in above answer c) input credit will not be available, because if u are availing benefit of some abatement, u will not be allowed to take benefit of any abatement. Service tax would be levied on 70% of the value of bill, which includes value of food as well ( thats why abatement is given, as value of food is also included in the total value )
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| Answer by: Rishabh Upadhyay |
| Thanks , can u please clarify what would happen in case the assesse raise two bills separately, one for food and another for drinks, (As the same is allowed in the provisions) Will the abatement of 70% still applies to the bill for drinks, as no services tax is required on food bill in this case.
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| Answer by: PRIYANKA |
| I will clarify this issue soon, as per my view right now..abatement is available on billing whether it is of food or drinks..it doesnt matter...but still i will give a confirmed answer soon.
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| Answer by: PRIYANKA |
| There is one more pont, as said by Mr. saurabh mehra..u cannot avail of ssi exemption once u get urself registered with service tax department, they get a declaration signed by you in this respect
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| Answer by: Ashish Chaudhary |
| a)Restaurant has an option to claim exemption till the threshold limit of Rs. 10 lacs notwithstanding the fact they are registered with the department.(b) In our view for calculating the limit of Rs. 10 lacs gross value (including value of foods but excluding VAT amount) should be considered since the exemption notification speaks about gross amount which is exempt from whole of service tax leviable thereon and as the abatement exempts partially, the same cannot be excluded. (c) Notification No. 1/2006 provides for abatement. Said Notification provides that credit shall not be admissible for input, input services and capital goods. (d) Abatement is available only when bill amount include charges for food also on which VAT is levied. If services charges are shown separately, abatement cannot be claimed. All above propositions may not be equally applicable when negative list based services tax is implemented.
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| Comments |
| Posted By : Sourabh Mehra |
08-May-2012, 05:13:55 |
| Mr. Rishab , on restaurants service tax is applicable . now the abatement is 60% not 70 %.
secondly ssi exemption will be available. |
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