More than 20,000 restaurants and hotels in Gujarat will shut shop on April 29 to demand the withdrawal of service tax on fully or partly air-conditioned restaurants introduced in the Union Budget 2013-14. Three-four-five star hotels will serve their resident guests at their eateries,but will not entertain outside guests during the strike.
We planned to hold this strike on March 13,but wanted to meet the Finance Minister P Chidambaram and PM Manmohan Singh before went ahead with it. The Finance Minister did not give us time to meet him. We shared our grievances with BJP leaders like Arun Jaitley,Yashwant Sinha and Haren Pathak and they agreed that it is wrong of the government to levy this tax and supported us. It looks like the government is slowly trying to sneak in expenditure tax which was introduced by the then FM,Manmohan Singh,in 1991-92 and later repealed, says Ashwin Gandhi,spokesperson of Hotel and Restaurant Association Western India (HRAWI) and a member of the Gujarat Rajya Hotel Federation.
He added,Incidentally,Gujarat will be affected by this tax only this year as the 2012 budget had levied a service tax of 12.36 per cent on 40 per cent of the invoice of only partly or fully AC restaurants.
Gujarat did not fall under the ambit of this tax as it had prohibition,but from this year the state has to follow it.
The budget,however,says that if any part of the restaurant is air-conditioned,the tax is applicable. This hits small restaurants and beverage-owning shops because the are partially air-conditioned. Fearing corruption from central excise officers and commissioners,the Federation of Hotel & Restaurant Associations of India (FHRAI) has called for nationwide strike. It has demanded an immediate withdrawal of the tax.
Due to the steep tax,restaurant owners and hoteliers will follow the no bill,no tax way,wherein they may choose to take the payment from a customer without billing it and thereby avoiding tax, said a spokesperson from FHRAI,Western Region. This will lead to the state government loosing VAT and service charge both. We fear that this money will ultimately be pocketed by excise officers and commissioners, he further said.