800 restaurants switch off their ACs

You may no longer be able to escape the summer heat by stepping into your favourite bar, as an estimated 800 restaurants (permit rooms) across the city are planning to shut down their air-conditioned (AC) sections. Naresh Kamath reports.

You may no longer be able to escape the summer heat by stepping into your favourite bar, as an estimated 800 restaurants (permit rooms) across the city are planning to shut down their air-conditioned (AC) sections.

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Bars decided to take this step after the state excise department started levying a service tax of 10.3% on all air-conditioned hotels, which the hoteliers describe as prohibitive.

The tax came into effect on May 1.

The tax will have to be borne by patrons who use the non-AC section as well.

“We are forced to remove the air-conditioning as this tax will make the business unaffordable,” said Sudhakar Shetty, president of Indian Hotel and Restaurant Association (Ahar), the apex body of the hotel industry.

“We cannot afford to further burden the consumers as they will stop coming.”

There are more than 2,300 permits rooms in Mumbai. Restaurant associations have approached both the central and state governments for relief from this tax, but it has not been waived.

“We are already facing a lot of problems with shortage of staff and the rise in price of essential commodities. Customers are unwillingly to shell out more,” said Shetty.

Shailesh Shetty, president of Disha Hoteliers Association, is equally unhappy.

“People will shun restaurants and shift to illegal joints, depriving the state of revenue,” he said, adding that as the cost of all items has increased, what hotels need are tax breaks and not new taxes.