Points to Note

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.