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HindustanTimes Thu,23 Oct 2014

Additional service tax on non-alcohol servingrestaurants upsets owners

HT Live Correspondent, Hindustan Times  Ludhiana, February 28, 2013
First Published: 20:56 IST(28/2/2013) | Last Updated: 20:57 IST(28/2/2013)

The Union Budget 2013-2014 imposing additional service tax on non-alcohol serving restaurants has disappointed many restaurateurs and denizens alike in the city.

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Till the last year, only the air-conditioned restaurants with license to serve alcoholic beverages were liable to pay service tax that amounted to 12.36% on 40% of the bill. Now, however, any air-conditioned restaurant whether serving alcohol or nor will have to bear the tax. Notably, the cost of eating out even in a non-alcohol serving restaurant now stands at 20% of the bill that includes 14.23% charged as VAT (Value Added Tax) and surcharge.

The move has brought about strong reactions from the restaurant business operators as well as those who like to eat out.

Amarvir Singh, Punjab secretary of the Hotel and Restaurant Association of Punjab, said the additional tax would prove a big blow to restaurant operators. Out of 116 members of the association in Ludhiana, only 14 restaurants serve liquor at present, he shared.

“Now, the rest of the operators too will have to bear the tax, which will ultimately burn a hole in the wallet of those eating out. This will hamper the interest of the restaurateurs, whose survival will become a question,” lamented Singh.

“Even on the state level, only 117 operators are serving liquor out of the organisation's over 700 members in Punjab, which means the huge number of non-alcohol serving restaurants are liable to service tax,” said Singh, adding: “Punjab is anyway paying the highest VAT, and the additional burden will break the back of many.”

While those serving liquor will see no difference in the tax they charge from people, but those who do not, are clearly shocked. Inderpal Singh, owner of vegetarian restaurant “Spice Cube”, who sounded quite upset over the new tax, said the move would promote the serving of alcohol in restaurants. “Non-payment of tax on the bill was an attraction to visitors until now. It will become difficult for restaurants like us,” he said.

“In Ludhiana, hanging out with family or friends is all about eating out. This will now pinch our pockets,” added Sunita Nagar, a resident of BRS Nagar.

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