Mumbai restaurants to shut shop in protest against service tax on April 29

Apr 26, 2013, 22:27 IST | PTI

Over 27,000 restaurants in the city 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 even partly air-conditioned restaurants in the budget.

Around 27,000 hotels and restaurants in Mumbai will join an all-India strike on Monday, April 29, to protest the new service tax on fully or partly air-conditioned eateries.

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.

The bandh call has been given by the Indian Hotels and Restaurants Association (AHAR) and supported by its affiliates all over the country, Shetty said

Shetty said that AHAR and other groups have made written submissions to UPA chairperson Sonia Gandhi and Finance Minister P. Chidambaram, but to no avail. "Most MPs we met gave us a patient hearing but pleaded helplessness in the matter," he added.

He pointed out that a majority of AHAR members in Mumbai were small eating joints which kept a part of their premises air-conditioned in view of customer demands.

"The new service tax will drive many customers to eat from illegal roadside eateries that run their businesses without paying taxes," Shetty said.

He claimed that nearly 135 eateries in middle-class areas have already downed shutters in the past couple of years and other laws and norms have made it impossible for many restaurateurs to continue their businesses.

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