According to financial act ,1994 , section 66E(i) , Service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner is DECLARED SERVICE. What is taxable? Service portion while supplying the food is taxable under service tax act.Value of food on which vat is levied is not taxable under the act. Exemption: Services provided for serving of food or beverages by restaurant, eating joint or mess which has no air conditioning or central heating facility are exempt from service tax. w.e.f. 1/4/13. Services to an educational institution by way of catering under mid day meals scheme sponsored by government are exempt. Notification no 25/2012 , sr no 9 (a). Before 1/4/13, there were two conditions for taxability under food related services The restaurant should have AC or central heating And The restaurant serves alcoholic beverages. The second condition is removed with effect from 1/4/13. So now all the restaurant which has AC or heater are liable to pay service tax. In spite of this, small service provider exemption is available to them. Service Tax on 40% value: The restaurants with AC or central heating are required to pay service tax on 40% of the value of services. So rate will be 4.944%. CBEC circular no 139/8/2011 Sometimes service provider has more than...