The survey conducted by the Commissionerate of service tax, Mumbai- 2 in the month of July showed that 471 restaurants out of 805 restaurants have not registered with the service tax department as well as failed to pay service tax.
Commissionerate of service tax, Mumbai- 2 conducted a survey of restaurants in the month of July where 805 restaurants were visited by the survey team to verify the service tax compliance.
Out of the remaining 334 hotels and restaurants, 76 have registered but not paid service tax. The survey also states that 70% of restaurants have been collecting service tax from the customer but have not registered and also did not pay the service tax.
The interest levied on these restaurants and hotels is 18% and after the survey 48 restaurants have applied for service tax registration. Two major restaurants have admitted that they have not paid service tax and have agreed to pay Rs 30 lakhs.
Out of these restaurants, one has been collecting service tax since May 2011 but has failed to deposit it to the government. The party has to pay Rs 23 lakhs as liability and have also admitted to doing so.
The department is examining the option of prosecution if the person has collected service tax without taking registration and also without depositing the same to the government.
Under section 89 of the finance act 1994 the person can be prosecuted for seven years.
"Restaurants are supposed to charge 12% service tax on 40% of the whole bill amount and as per the law if they have collected it wrongly then it has to be deposited to the service tax department.," said R. Sekar commissioner of service tax, Mumbai-2.
The service tax department have issued letter to all those who have not registered and will recover the service tax.
For the current fiscal, the service tax department -2 of Mumbai has a target of collecting Rs 15,500 crore and the the Mumbai service tax department target is Rs 62,500 crore, R. Sekar said.
