HC asks Delhi govt to reply over VAT levied by restaurants on food bills

Under the rules, VAT can only be levied on the goods component which is 60% of the bill amount and not on the remaining 40% service component, the petition said.

The Delhi high court on Wednesday sought the state government’s reply to a petition alleging the restaurants in the Capital of charging excess value added tax (VAT) on the food and drinks served.

Under the rules, VAT can only be levied on the goods component which is 60% of the bill amount and not on the remaining 40% service component, the petition said. (HT file photo for representation)

A bench of chief justice G Rohini and justice Sangita Dhingra Sehgal also asked the Centre to respond to the plea and fixed the matter for hearing on October 3.

The petition alleged that the restaurants were charging VAT on the entire bill, including the service component. Under the rules, VAT can only be levied on the goods component which is 60% of the bill amount and not on the remaining 40% service component, it said.

It also claimed that there was lack of appropriate guidelines for determination of goods component and service tax portion of the invoice.

The plea sought a direction to the Delhi government and commissioner of VAT to take appropriate action against the restaurants which charged VAT on the service components.

The petitioner told the court that it had written a letter last month to Delhi government’s commissioner of VAT requesting to take action against such restaurants, but had not received any response till date.

“The government of NCT of Delhi is a direct beneficiary from this illegal collection of taxes, it is quite possible that it does not want to take any action against such illegal collection of taxes,” the petitioner claimed.