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Circular No.173/8/2013 –  ST
 F.No.334/3/2013-TRU Government of India Ministry of Finance Department of Revenue
Central Board of Excise & Customs
Tax Research Unit
New Delhi, 7th October, 2013

Chief Commissioners of Central Excise and Customs (All),
Director   General   (Service   Tax),   Director   General   (Central   Excise
Intelligence), Director General (Audit), Commissioners of Service Tax (All)
Commissioners of Central Excise (All),
Commissioners of Central Excise and Customs (All). Madam/Sir,
Subject: Restaurant Service- clarification -regarding

As  part  of  the  Budget  exercise  2013,  the  exemption for  services  provided  by  specified restaurants extended vide serial number 19 of Notification 25/2012-ST was modified vide para 1 (iii) of Notification 3/2013-ST. This has become operational on the 1st of April, 2013.
In  this  context,  representations  have  been  received.  On  the  doubts  and  questions  raised therein clarifications are as follows:

In a complex where air conditioned as well as non-air conditioned restaurants are operational but  food  is  sourced from  the common kitchen, will service tax arise in the non-air conditioned restaurant?
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’) attracts service tax. In  a complex, if there is more than one restaurant, which are clearly demarcated and separately named but food is sourced from a common kitchen, only the service provided in the specified restaurant is liable to service tax and service provided in a non air-conditioned or non centrally air- heated restaurant will not be liable to service tax. In such cases, service provided in the non air-conditioned   /   non-centrally   air-heated restaurant will be treated as exempted service and credit entitlement will be as per the Cenvat Credit Rules.

In  a  hotel, if  services are  provided by aspecified restaurant in other areas e.g. swimming pool or an open area attached to the restaurant, will service tax arise?
Yes. Services provided by specified restaurant inother areas of the hotel are liable to service tax.

Whether service tax is leviable on goods sold on MRP basis across the counter as part of the Bill/invoice.
If goods are sold on MRP basis (fixed under the Legal Metrology Act)  they have to  be  excluded from total amount for the determination of value of service portion.

3.   Trade  Notice/Public  Notice  may  be  issued  to  the  field  formations  and  taxpayers.  Please acknowledge receipt of this Circular. Hindi version follows.

Yours sincerely, (S. Jayaprahasam)
Technical Officer, TRU Tel: 011-2309 2037


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