Against increase in service tax on hotels with AC facility
Are air-conditioners a luxury or a necessity? This moot question led to a one-day token strike by hotel owners in the city on Monday. They were up in arms against increase in service tax, in the recent Union budget, on hotels with air-conditioning facilities.
R. Srinivasan, Secretary, Tamil Nadu Hotels Association, said that all 20,000 members of the association spread across the State had downed shutters to express their protest.
The Tamil Nadu Bakery Federation and many coffee and tea stall owners had also joined them.
According to Mr. Srinivasan, hotels were normally subjected to the State Government’s sales tax. It was in 2011, that then Finance Minister imposed service tax on air-conditioned hotels possessing licence to serve liquor because they fell in the high-end category. Previously, a service tax of 12.9 per cent was levied on hotels registering a turnover of Rs.10 lakh per annum, but now it has been increased by 4.94 per cent.
In this year’s budget, the tax was extended to all hotels with air-conditioning facilities.
“This, we feel, is unjust because mere existence of air-conditioned halls, which have become a necessity, in hotels could not be a reason to bring them under the service tax net,” he said.
He also pointed out that members of All India Hotels Association had met in Mumbai on April 15 and decided to move the court challenging the imposition of service tax.