Points to Note

Consumer Voice - - Legal Matters -

The ob­ser­va­tions made by the courts in their var­i­ous judge­ments make it clear that: 1. Eat­a­bles con­sumed in a com­fort­able at­mos­phere, en­joy­ing the am­bi­ence and ex­pe­ri­enc­ing other fa­cil­i­ties in a ho­tel, a restau­rant, or a club, can­not be sep­a­rated for billing for their price, ser­vices and other taxes levied by the govern­ment. The bill in­cludes the charges for all the ser­vices that one en­joys at such places. 2. A restau­rant pro­vides many ser­vices in ad­di­tion to the sup­ply of food. It pro­vides fur­ni­ture and fur­nish­ings, linen, crock­ery and cut­lery, and in the eat­ing places of to­day they pro­vide ex­pe­ri­ence through am­bi­ence, mu­sic and some­times dance floor, etc. Hence, at a ho­tel/restau­rant/club, cus­tomers are charged for all this apart from the bev­er­age or the food that they or­der.

What about Home De­liv­er­ies?

So, when a cus­tomer gets the restau­rant food de­liv­ered at home and is not be­ing served in the ho­tel/restau­rant, should they be charged the same way? Can a restau­rant levy ser­vice tax or ser­vice charges for merely de­liv­er­ing the packed food? The of­fice of deputy com­mis­sioner, cen­tral ex­cise and ser­vice tax de­part­ment, re­ceived a query in 2015 from a restau­rant in Chandi­garh on this is­sue as its cus­tomer had re­sisted giv­ing ser­vice tax on home de­liv­ery. The re­ply from the de­part­ment said: “Food items given un­der free home de­liv­ery sys­tem is a sale of food and no ser­vice is pro­vided, may it be serv­ing food, am­bi­ence of en­joy­ing air cool­ing, live en­ter­tain­ment, per­son­alised hos­pi­tal­ity, etc. Hence, no ser­vice tax is to be im­posed on such trans­ac­tion.” The de­part­ment also clar­i­fied that: While en­joy­ing all air cool­ing and cen­tral heat­ing fa­cil­ity avail­able in the restau­rant/ho­tel, ser­vice tax can­not be charged on food be­yond the rate of 5.6 per cent of the food bill. Tax can only be im­posed on 40 per cent of the to­tal food bill and not on the to­tal bill.

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