Air-conditioned restaurants in Mumbai are celebrating a Kerala High Court order passed early this month, holding the levy of service tax to be unconstitutional. The HC held that “levy of tax on supply of food or drink, whether by way of, or as a part of service, is a State subject”. Consequently, it said that the Centre can’t impose service tax by amending the Finance Act.
The order was in response to a writ petition filed by the Kerala Classified Hotels and Resorts Association and other associations. It challenged the constitutional validity of service tax on restaurants licensed to serve alcohol – a provision introduced by the Finance Act, 2011, from May 2011.
Full report here Times of India