By Tarun Ghia, Pratik Mehta, Brijesh Cholera, Chartered Accountants
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Vide this Circular, the CBEC has provided clarifications on various doubts and questions raised pertaining to Restaurant Services as amended w.e.f. 01-04-2013.
With reference to a complex where air -onditioned as well as non-air conditioned restaurants are operational but food is sourced from the common kitchen, it is clarified that services provided in relation to serving of food or beverages by a restaurant, eating joint or mess, having the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year attracts service tax. In a complex, if there is more than one restaurant, which are clearly demarcated and separately named but food is sourced from a common kitchen, only the service provided in the specified restaurant is liable to service tax and service provided in a non air-conditioned or non-centrally air- heated restaurant will not be liable to service tax. In such cases, service provided in the non air-conditioned /non-centrally air-heated restaurant will be treated as exempted service and credit entitlement will be as per the Cenvat Credit Rules.
With reference to a hotel, if services are provided by a specified restaurant in other areas e.g. swimming pool or an open area attached to the restaurant, it is clarified that services provided by specified (i.e. only which are covered as taxable) restaurant in other areas of the hotel are liable to service tax.
With reference to whether service tax is leviable on goods sold on MRP basis across the counter as part of the bill/invoice, it is clarified that if goods are sold on MRP basis (fixed under the Legal Metrology Act), they have to be excluded from total amount for the determination of value of service portion.
