Services provided in relation to serving of food or beverages under Mega exemption notification :
A. Serving of food/beverages by restaurant: Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year are exempt from service tax.
Therefore, services provided in relation to serving of food or beverages by a restaurant, eating joint or mess, having the facility of air-conditioning or central air heating in any part of the establishment, at any time during the year (hereinafter referred as ‘specified restaurant‘) would attract service tax. In this regard following points have been clarified by Circular No.173/8/2013 – ST dated 07.10.2013:
(i) If specified restaurant in a hotel provides services in other areas of the hotel (e.g. swimming pool or an open area attached to the restaurant), such services are also liable to service tax.
(ii) In a complex, air-conditioned as well as non-air-conditioned restaurants are operational. These restaurants are clearly demarcated and separately named, but food is sourced from a common kitchen. In such a case, only services provided in a specified restaurant are liable to service tax. However, services provided in a non air-conditioned or non centrally air- heated restaurant will be treated as exempted service and thus, will not be liable to service tax.
(iii) If goods sold on MRP basis (fixed under the Legal Metrology Act) across the counter as part of the Bill/invoice, they have to be excluded from total amount for the determination of value of service portion.
B. Serving of food/beverages by canteen: Services provided, in relation to serving of food or beverages, by a canteen have been exempted from service tax provided such canteen:-
(i) is maintained in a factory covered under the Factories Act, 1948, and
(ii) has facility of air-conditioning/central air-heating at any time during the year.