On Monday, restaurants and eateries in the city will remain closed in support of their demand that the Central government withdraw the newly imposed service tax for air-conditioned establishments.

Addressing presspersons on Saturday, K.T. Srinivasaraja, president of the Chennai Hotels Association, said that hotels would remain closed from 6 a.m. to 6 p.m. on that day. There are a total of 5,000 hotels in the city of which around 3,000 are air-conditioned. “Even small restaurants that are not air-conditioned will be closed on that day in support of our demand,” he said.

The new service tax is for 40 per cent of the sales turnover of air-conditioned restaurants. Srinivasan, secretary, Tamil Nadu Hotels Association, explained that the Centre was levying a 12.36 per cent tax. “For instance, if a customer eats say for Rs. 100, the State government collects Rs. 2 – 12.50 as value added tax. Now the Central government wants an additional Rs. 4.95. It is the customer who has to bear this amount. This is double taxation as there is only one transaction. The Indian Constitution defines supply of food and drinks in hotels as ‘deemed sales’ and empowers the State governments to collect sales tax on the total value of sales,” he explained.

Mr. Srinivasaraja said that there have been instances of customers questioning the sudden increase in prices for even a cup of coffee. “It has been a very difficult month for us. Regulars at hotels are questioning us. There are people who take food or coffee on a daily basis on working days and they are dissatisfied. Even college and company canteens that are air-conditioned will be covered by this,” he explained.

R. Rajkumar, secretary, Chennai Hotels Association, said that hoteliers were also finding it extremely difficult to get coins on a daily basis. “Our transactions require a lot of change and we are forced to pay up to 25 per cent commission. We are requesting the Central government to provide more coins for the hotel industry,” he said.

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