The Indian Hotel and Restaurant Association (AHAR) has filed a writ petition with the division bench of Bombay High Court seeking the withdrawal of the 10.3 per cent service tax on liquor bill that is charged if a restaurant has air conditioning. Most eateries end up putting this charge on the client. In June, the Kerala bar association had moved court for the same reason, and was successful in getting a stay.

"Permit rooms are already charging VAT on liquor. The new taxation has led to drop in sales, as the bill amount has shot up," said Sudhakar Shetty, president AHAR.

Shetty revealed that in last seven months, city permit rooms have witnessed a drop in footfall and business has declined by 45 per cent.