Service tax is leviable on service charges and VAT is also leviable on service charges.

ORDER

Mr. Justice Jasbir Singh (Retd.), President - This appeal is directed against an order dated 04.02.2016, rendered by the District Consumer Disputes Redressal Forum-I, UT, Chandigarh (hereinafter to be called as the Forum only) vide which, it partly accepted the complaint, filed by the complainant (now respondent) and directed the Opposite Party (now appellant), as under:-

"In view of the above discussion, the present complaint deserves to succeed and the same is partly allowed. OP-1 is directed :-

(i) To refund the excess amount of service tax illegally charged from the complainant.

(ii) To pay Rs. 10,000/- as compensation to the complainant for the harassment caused to him.

(iii) To also pay a sum of Rs. 7,000/- to the complainant as litigation expenses.

This order be complied with by OP-1 within one month from the date of receipt of its certified copy, failing which it shall make the payment of the amount mentioned at Sr. No. (ii) above, with interest @ 12% per annum from the date of filing of the present complaint till realization, apart from compliance of directions at Sr. No. (i) & (iii) above."

The facts, in brief are that, the respondent/complainant had filed a consumer complaint bearing no.530 of 2015, wherein, it was alleged that besides excess charging of service tax and VAT, the appellant/opposite party had also wrongly charged service charges from him, which had already been declared illegal by the Chandigarh Administration. Qua latter two issues, no relief was given to the respondent, by the Forum.

It was case of the respondent that he enjoyed lunch on 05.08.2015 in the restaurant of the appellant. Instead of charging Rs. 475/-, he was charged an amount of Rs. 589/-. His objection is qua charging of service tax and VAT levied thereupon.

The appellant in its written version, admitted the factual matrix of the case. It was averred that service charges are charged for the services availed by the customers, at the restaurant of the appellant and there is no law prohibiting the charging of service charges. VAT and service tax had been charged by the appellant, as per law framed by the State Govt. and Central Government respectively. It was averred that the press release dated 31.10.2014 regarding non-charging of service charges, has been repealed vide subsequent notification dated 24.2.2015. The remaining averments, were denied, being wrong.

2. The Parties led evidence, in support of their case.

3. After hearing Counsel for the parties, and, on going through the evidence, and record of the case, the District Forum, partly accepted the complaint, in the manner, referred to, in the opening para of the instant order.

4. Feeling aggrieved, the instant appeal, has been filed by the appellant/Opposite Party.

5. We have heard Counsel for the parties, and, have gone through the evidence, and record of the case, carefully.

6. It is not in dispute that as per Rule 2(c) of the Service Tax (Determination of value) Rules 2006, service provider is authorised to charge service tax on 40% of the bill amount only and 60% in case of outdoor catering. The Forum while interpreting the provisions of Rule 2(c) of the Service Tax (Determination of Value) Second Amendment Rules, 2012, notified on 06.06.2012 w.e.f. 01.07.2012, came to the conclusion that excess service tax was charged on service charges levied by the appellant. It was a specific defence of the appellant that service tax is payable on service charges as well.

7. We have gone through the provisions of Rule 2(c) of the Service Tax (Determination of Value) Rules 2006, and Rule 5 of the Rules and explanations added thereto and are satisfied that service tax is leviable on service charges also. Rule 5 aforesaid shows as to how to calculate taxable service. The explanations added with this Rule makes it very clear that on service charges also VAT is leviable. In view of the above, the order under challenge, needs interference of this Commission, and the same deserves to be set aside.

8. No oth