Plea on excess VAT by restaurants: HC seeks AAP govt response

New Delhi, Aug 24 (PTI) Delhi High Court today asked theAAP government to file its response on a plea alleging thatrestaurants here were charging excess value added tax (VAT) onthe food and drinks served by them. A bench of Chief Justice G Rohini and Justice SangitaDhingra Sehgal also asked the Centre to respond to theplea andfixed the matter for hearing on October 3. The petition contends that under the rules, VAT is to belevied only on the goods component which is 60 per cent of thebill amount and it cannot be imposed on the remaining 40 percent service component. It alleged that the restaurants were charging VAT on theentire bill, including the service component, which is aviolation of the law. The plea sought a direction to the Delhi government andCommissioner of VAT to take appropriate action against therestaurants which charged VAT on the service components. The petitioners told the court that they had written aletter last month to Delhi Government’s Commissioner of VATrequesting them to take action against such restaurants, buthad not received any response till date. "The government of NCT of Delhi is a direct beneficiaryfrom this illegal collection of taxes, it is quite possiblethat it does not want to take any action against such illegalcollection of taxes," the petitioners claimed. They also sought court’s direction to authority concernedto declare that VAT could be collected only in relation togoods component of an invoice and cannot be collected inrelation to the service component. It also claimed that lack of appropriate guidelines fordetermination of goods component of the invoice by Delhigovernment cannot permit the restaurants to charge bothservice tax and tax on sale of goods on the same component.PTI ABA HMPARC