Basically, there has been this post going around on facebook, and it's not your everyday forward chain-msg because it was shared even by Akosha (Consumer Rights organization).
It claims that restaurants often bill you the total amount, charge service CHARGE on it and then charge Service TAX on the whole amount including service charge,
where as it should make sense that service tax should be applicable on service charge since they're already charging you an amount for the services rendered.
So yesterday, a place tried to charge me tax on the whole amount = Rs 51 (the service tax) and I called the manager, explained it to him what they're doing is wrong and he reduced it from Rs 51 to Rs 4. Nice saving.
But as I returned home, I started searching the whole issue to better enlighten myself and for reference in the future.
Now this is a mind-**** article. On one hand, DHCBA tells me that what I did was right, but then there is another law that says service tax is applicable on 40% of the total billed amount. :/
As you can see here, the 40% contradiction is mentioned here as well. Now, I am confused that when I go out dining the next time, am I supposed to pay Service Tax on 40% of the billed amount or just on the service charge?
Get your suits and lawyer up.
It claims that restaurants often bill you the total amount, charge service CHARGE on it and then charge Service TAX on the whole amount including service charge,
where as it should make sense that service tax should be applicable on service charge since they're already charging you an amount for the services rendered.
So yesterday, a place tried to charge me tax on the whole amount = Rs 51 (the service tax) and I called the manager, explained it to him what they're doing is wrong and he reduced it from Rs 51 to Rs 4. Nice saving.
But as I returned home, I started searching the whole issue to better enlighten myself and for reference in the future.
Code:
http://www.legallyindia.com/201211053231/Bar-Bench-Litigation/dhcba-gets-restaurant-service-tax-calculation-wrong-in-public-interest-notice
Code:
https://dkmahant.wordpress.com/2012/11/03/how-few-restaurants-charge-excess-service-tax-do-not-pay/
Get your suits and lawyer up.