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Clarification Issued in the Matter of Service Tax; Only Air-Conditioned or Air-Heated Restaurants to Pay Service Tax; Restaurants, Eating-Joints or Messes Which Do Not Have the Facility of Air-Conditioning Or Central Air-Heating in Any Part of the Establishment are Exempt from Service Tax.

At present, Service Tax is chargeable on services provided by restaurants, eating-joints or messes which have the facility of air-conditioning or central air-heating in any part of the establishment at any time during the year in relation to serving of food or beverages. Restaurants, eating-joints or messes which do not have the facility of air-conditioning or central air-heating in any part of the establishment are exempt from service tax. In other words, only air-conditioned or air-heated restaurants are required to pay Service Tax. In respect of such air-conditioned or air-heated restaurants which are required to pay Service Tax, 60% of the value is to be deducted from the total amount charged while applying the rate of Service Tax and tax is to be calculated on the balance 40%. With the increase in the rate of Service Tax to 14% (subsuming the Education Cesses) with effect from 1.6.2015, the effective rate of tax will be 5.6% of the total amount charged. Prior to 1.6.2015, when the rate of Service Tax was 12.36% (including Education Cesses), the effective rate was 4.94%.


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  1. Sunil says:

    Dear Sir,

    Whether service tax to be charged by Outdoor Catering Services provider who is providing services in a factory established as per factory act and also recovering partial amount from employees.


  2. rahulkaulgud says:

    Dear Sir,

    Service tax liability in case of Outdoor Catering Services, provided in a subsidised canteen (partial recovery from employees) established under Factories Act:-

    1. The service tax liability if the Canteen is not having AC/Heating.
    2. The service tax liability if the Canteen is having AC/Heating.



  3. Rajesh Punjabi says:

    In case of part AC, part non AC, the entire restaurant will be liable for Service Tax.
    What I want to know if the stipulation of serving liquor is done away with. I.e.whether non AC restaurant serving liquor will be liable to service tax no?

  4. K T Mandaliya says:

    In case of Services falling under Outdoor Catering Services, if provided in a canteen established under Factories Act, the exemption is allowed, if the Canteen is having AC

  5. Ram says:

    what is the situation, in cases where a restaurant is serving food in a portion without AC facility and a closed portion with AC facility… Both the facilities are in same restaurant. Billing happens separately in AC facility and Non AC facility.

    Whether Service tax need to be charged in both the portions.

  6. P N V GIRI says:

    Sir, Time and again, I raise this question, whether the same service tax is applicable for the take away items from ac restaurants?

    Your kind clarification is solicited

  7. M R JETHWANI says:

    What has rendering of service got to do with Air Conditioning and Air Heating ? On the one hand it is being levied on 40% of food item billed and then this silly condition .

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June 2024