Mumbai: Over 27,000 restaurants in Mumbai are likely to remain closed on Monday in response to a call by Indian Hotel & Restaurant Association (AHAR) to protest the imposition of service tax on partly air-conditioned restaurants in the budget. AHAR's bandh call has also been supported by hotel associations in Gujarat, Tamil Nadu and Federation of Hotels and Restaurants Association of India among others.
"From April, I have to charge my customers an additional 12.63 per cent on 40 per cent of their total bill as service tax and pay to central treasury if my restaurant is fully or partly air-conditioned. This is in addition to the 12.5 per cent VAT. This move of the government is unjustified as service tax will now be applicable to all customers, including those in the non air-conditioned area," AHAR President Arvind Shetty said.
AHAR had made submissions to Finance Minister P Chidambaram to roll back the levy but there was no relief, he said. "Majority of our members operate small food joints serving snacks and meals. A small portion in these restaurants is air-conditioned due to customer demand. The new service tax provision calls for a hike in our prices, which will lead to losses as many customers will start eating unhygienic food from unauthorised roadside vendors," AHAR General Secretary Shashikant Shetty stated.