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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
North Block
New Delhi, 7
th
October, 2013
To
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 1
st
of April, 2013.
2. In this context, representations have been received. On the doubts and questions raised therein clarifications are as follows:
Doubts Clarifications
1.
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.
2.
In a hotel, if services are
provided by a specified
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 in other areas of the hotel are liable to service tax.
3.
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
circulars no 173 8 2013 st | iKargos