Service tax on restaurants and hotels not Constitutional

In a recent ruling, the Kerala High court, in Kerala Classified Hotels and Resorts Association and others vs Union of India and others (2013-TIOL-533-HC-KERALA-ST), held the levy of service tax on supply of food and beverages by restaurants and services of lodging provided by hotels as unconstitutional.

The petitions before the high court involved two specific transactions related to restaurants and hotels on which the court was asked to rule on the Constitutional validity of levy of service tax by the central government on these businesses.

The first question was whether the central government has the Constitutional right to levy service tax on the service portion involved in the transaction of sale of food and beverages by restaurants.

Full report here Business Standard


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