Trade Notice No. 07/2011 - Service Tax/SH.
Dated Shillong, the 23rd May’2011.
Subject:
- Short Term Accommodation Service and Restaurant Service- clarification
-regarding
*********
Attention of the members of Trade, Industry and all others concerned are
hereby invited to the Board’s Circular No. 139 / 8 / 2011 – ST
issued vide F. No. 334/81/2010-TRU dated 10.05.2011 wherein
TRU has clarified on the doubts raised by the potential tax payers on the
levy of service tax on the two new services relating to services provided
by specified restaurants and by way of short-term hotel accommodation came
into force with effect from 1st May 2011.
2. These are addressed as follows:
Short Term Accommodation Service:
Sl.
No |
Queries |
Clarification |
1. |
What is the relevance of declared tariff? Is the tax required to be
paid on declared tariff or actual amount charged? |
“Declared tariff” includes charges for all amenities provided in the
unit of accommodation like furniture, air-conditioner, refrigerators
etc., but does not include any discount offered on the published
charges for such unit. The relevance of ‘declared tariff’ is in
determining the liability to pay service tax as far as short term
accommodation is concerned. However, the actual tax will be liable
to be paid on the amount charged i.e. declared tariff minus any
discount offered. Thus if the declared tariff is Rs 1100/-, but
actual room rent charged is Rs 800/-, tax will be required to be
paid @ 5% on Rs 800/-. |
2. |
Is it possible to levy separate tariff for the same accommodation in
respect of corporate/privileged customers and other normal
customers? |
It is possible to levy separate tariff for the same accommodation in
respect of a class of customers which can be recognized as a
distinct class on an intelligible criterion. However, it is not
applicable for a single or few corporate entities. |
3. |
Is the declared tariff supposed to include cost of meals or
beverages? |
Where the declared tariff includes the cost of food or beverages,
Service Tax will be charged on the total value of declared tariff.
But where the bill is separately raised for food or beverages, and
the amount is charged in the bill, such amount is not considered as
part of declared tariff. |
4. |
What is the position relating to off-season prices? Will they be
considered as declared tariff?
|
When the declared tariff is revised as per the tourist season, the
liability to pay Service Tax shall be only on the declared tariff
for the accommodation where the published/printed tariff is above
Rupees 1000/-. However, the revision in tariff should be made
uniformly applicable to all customers and declared when such change
takes place. |
5. |
Is the luxury tax imposed by States required to be included for the
purpose of determining either the declared tariff or the actual room
rent? |
For the purpose of service tax luxury tax has to be excluded from
the taxable value. |
Services Provided by Restaurants:
1. |
If there are more than one restaurants belonging to the same entity
in a complex, out of which only one or more satisfy both the
criteria relating to air-conditioning and licence to serve liquor,
will the other restaurant(s) be also liable to pay Service Tax? |
Service Tax is leviable on the service provide by a restaurant which
satisfies two conditions: (i) it should have the facility of air
conditioning in any part of the establishment and (ii) it should
have license to serve alcoholic beverages. Within the same entity,
if there are more than one restaurant, which are clearly demarcated
and separately named, the ones which satisfy both the criteria is
only liable to service tax. |
2. |
Will the services provided by taxable restaurant in other parts of
the hotel e.g. swimming pool, or an open area attached to a
restaurant be also liable to Service Tax? |
The taxable services provided by a restaurant in other parts of the
hotel e.g. swimming pool, or an open area attached to the restaurant
are also liable to Service Tax as these areas become extensions of
the restaurant. |
3. |
Is the serving of food and/or beverages by way of room service
liable to service tax? |
When the food is served in the room, service tax cannot be charged
under the restaurant service as the service is not provided in the
premises of the air-conditioned restaurant with a licence to serve
liquor. Also, the same cannot be charged under the Short Term
Accommodation head if the bill for the food will be raised
separately and it does not form part of the declared tariff. |
4. |
Is the value added tax imposed by States required to be included for
the purpose of service tax? |
For the purpose of service tax, State Value Added Tax (VAT) has to
be excluded from the taxable value. |
3.
Hindi version will follow.
AUTHORITY:
Board’s
Circular No.
139 / 8 / 2011 – TRU
Issued vide F.No. 334/81/2011-TRU, Dated 10th May 2011
Disclaimer: Though care has been taken to reproduce the text in its
original form, in case of any inadvertent mistake, the above mentioned
circular may be referred to.
(Anil Kumar Gupta)
Commissioner |