MUMBAI: City's over 9000 restaurants, hotels and bars have strongly condemned the recent move of the union government to charge double tax on all air-conditioned or partly air-conditioned restaurants across the country.
"We are paying VAT on our whole transaction and therefore the total transaction is a sale. There is an incidence of transfer of goods from the hotelier to a customer. Therefore it a pure sale and once we pay VAT on 100% value of the goods, there nothing remains to be taxed," said a statement issued by Ahar, an association of restaurants and bars in the city.
"We are a given an abatement of 60%, treating the same as a deemed sale and required to pay Service Tax on 40% of the total bill. The policy of taxation very clearly says that the intent is to tax only service component and not the deemed sale. Therefore, logically the VAT should be levied only on sale part i.e. 60% of the total bill which Supreme Court has upheld in the recent BSNL case. However, VAT department is not accepting this and we are paying double tax on 40% ; one as VAT and another as Service Tax. By no stretch of imagination a transaction can be both service and sale at the same time," the release stated further.
"Two Restaurants situated in same area; One having a partly a/c section whereas other one totally non air conditioned. Partly a/c restaurant can challenge levying Service tax on its non a/c section on the grounds of unfair competition and discrimination in taxation in two identical cases," the release said further flaying discrimination among the same strata of businessmen in the hospitality industry.
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