Chennai/New Delhi, Apr 1 (): Eating out and home delivery of food will cost more from today. Not only eating out but also for the pizza delivered at your doorstep, or a burger picked up to have in your home or even the lunch in your office canteen if it is air-conditioned.
Since proper clarifications on a service tax provision, most home-delivery, takeaway joints, food & eating joints, beverage outlets at multiplex theatres self-service and air-conditioned joints are likely to extend service tax to all air-conditioned restaurants, without distinguishing whether it was a restaurant, canteen or a mess, leading to confusion on whether service tax should be imposed or not from April 1.
Tax experts, however, say that service tax can be levied only if there’s a service involved. In case of takeaways and home deliveries this cannot be levied. The food is already cooked and delivered and so no service, says tax experts.
Last year, budget put service tax on hotels serving liquor but this year it extends to all places which serve food and are air-conditioned. Hoteliers say that take away orders and home deliveries do not come to 40% of the income.
As per CBEC rule, only if the income from these activities cross 40% does it be termed service. The general service tax is disputed as that the rate levied uniformly for all air-conditioned eating joints is illogical.
Many eating joints are partly air-conditioned while major portions are not air-conditioned. At present, those eating in air-conditioned joints are given a menu list which has higher prices. Now the excise authorities would club the entire eating joint as under the air-conditioned category, since it would be difficult to know the billing systems.The hotel owners point out that big time and small time operators should not be clubbed together. The rates should vary as per their tax returns.