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Saturday, August 24, 2013

Collection of excess Service Tax by Mast Kalandar restaurant - 1

I ordered food from one of the Mast Kalandar restaurants some months ago.

The bill amounts were as follows:

Total = 286.00 INR
VAT @ 14.5% = 41.47 INR
Service Tax = 21.21 INR

Note that the bill did not make any mention of the Service Tax percentage. In their bill, it works out to be 7.42% (21.21 / 286) which is some nonsense calculation and totally illegal. As I've pointed out in an earlier post, Service Tax applied to restaurants is 4.94% of total bill. (Update 24/11/15: Since Service Tax has increased to 14.5% from 15/11/15, including another nonsense called Swachh Bharat Cess, the Service Tax applied to restaurants is now 5.8%)

So MastKalandar is flagrantly violating the law and overcharging customers on this component of the bill. Quite obviously when it comes to depositing the Service Tax with the govt, they would be depositing the correct amount, and thus are pocketing the difference of 2.5% per bill. Do you think the difference is small? Haha, think again.

Here is a probable calculation of the "extra" earnings per month in the name of the Govt of India, assuming conservative numbers:
800 meals served a day x 300 INR average bill x 30 days x 45 outlets x 2.5% excess charge = 81 LAKHS!

I contacted the outlet and of course the counter folks pleaded ignorance about the billing, they promised that someone from their main office would get back to me. True to form, nobody did. Subsequently I posted a message on the Mast Kalandar facebook wall, and someone from Mast Kalandar got back to me with the following message:

This is regarding to your query on the additional Service Tax at Mast Kalandar. We would like to clarify your doubts and confirm that this is totally as per the new rules on Service Tax by GOI in the restaurants. You can reach us at [email protected] or send us your number / email where we can chat further.

I messaged back with the following:

The charge percentage is not as per rules on service tax by GOI. For more info you may see the following: The allowed charge is 4.94%, you are charging higher than that.

Of course, they couldn't be bothered to reply post this exchange. A few months have passed and now I'm swinging into action again.


Service Tax Return Dates said...
This comment has been removed by a blog administrator.
How To Start A Tax Business said...

Thanks for the great info! I'm trying to watch what I ingest as my body attempts to properly digest it,
then I learn that I'm being bamboozled the whole damn time!