This post I have taken from Facebook. It is very good to know the info given in it.

-Gaurav.

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We had been to several restaurants recently. I observed that "service

tax" was being misused in the way it was being charged to customers.

Let me give an example.

- - - - - - - - - - - - - - - - - - -

Food and Beverage = Rs. 1000.00

Service Charges @ 10% = Rs. 100.00

Service Tax @ 4.94% = Rs. 54.34 (on F&B + Service Charges)

VAT @14.5% = Rs. 145.00

Total = Rs. 1299.34

As per the definition - "Service Tax can be charged ONLY for the

services provided to the customer".

Now, see what is happening here in the above example.

Service Tax should be charged only on the Service Charge amount i.e

Rs.100 ONLY, and NOT on the entire amount (1000+100).

In this example, the customer should be charged only Rs 4.94, whereas

he has been charged Rs. 49.00 extra.

I now have 3 to 4 restaurant bills, but for which I have paid only the

service tax on the service charge and NOT on the total amount.