Eateries lose their cool over A/C tax

Members of the hospitality industry plan to protest the recent tax hike on air-conditioned restaurants serving liquor

Eateries lose their cool over A/C tax

Members of the hospitality industry plan to protest the recent tax hike on air-conditioned restaurants serving liquor

Looking forward to watching the IPL matches with a glass of chilled beer, in the air-conditioned environs of your favourite restaurant? Chances are you might have to forego the AC bit, thanks to the 10.3 per cent service tax on air conditioned restaurants serving liquor, and the hiked excise duty on various liquor products.
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Spirit dampener: Hotels and restaurants screening the IPL matches
plan to switch off their air conditioners. File pic

So as not to lose customers, restaurants in the city are planning to switch off their air conditioners. Sudhakar Shetty, president of Indian Hotel and Restaurant Association (AHAR), confirmed the same, saying, "With the service taxes shooting up, we have been receiving constant calls from our members asking if air-conditioners should be removed from the restaurants."

Khushal Bhandari, president of the Thane Hotel and Restaurant Association (THARA), echoed Shetty's claim. "More than 100 small bar and restaurant owners in our association have decided to remove the air-conditioners from their restaurants, fearing that they will incur heavy losses once the new tax structure is imposed on the industry in the next few days."

Steep rise
Discussing the impact of soaring liquor prices, Shetty revealed that the cost of a 180 ml bottle of Signature whisky has risen to Rs 220 from Rs 165. In order to maintain the profit margin, an air-conditioned restaurant sells it to the customer at Rs 280 or Rs 300.

"It is the customer who has to bear the brunt of this new tax structure. Restaurants will soon be out of the reach of the common man. People will resort to visiting illegal joints where they will not be charged such exorbitant sums as tax. They will consume spurious liquor. Bootlegging will flourish, especially because liquor is so much cheaper in neighbouring states. This will ultimately result in a huge loss of revenue to the state exchequer," he added.

At the Hotel and Restaurant Convention organised by the Western India Hotel and Restaurant Association, held at Lavasa last week, many restaurant owners openly came forward to enquire about possible consequences of keeping their air conditioners switched off.

Unfortunately, they learnt that the law does not permit them to do so. "The liquor manufacturers have recently increased their rates by almost 50 per cent. In addition to this there is the 25 per cent VAT on liquor imposed on customers. It is becoming increasingly difficult for the restaurant and hotel owners to survive. Moreover, why are customers, who never order alcohol, being forced to pay the extra sum, simply because they are dining at an outlet that has a liquor licence?" asked R S Bedi, owner of Diplomat hotel.

Shutting shop
Sukesh Shetty, vice president of AHAR, threatened a complete shutdown of bars. "If this hike is not withdrawn, the association will ask all its Permit Room Hotel members in Mumbai, and other affiliated and sister associations across the state to pull down their shutters in protest. This is sure to affect the revenue collections in lakhs, and result in large-scale unemployment. These new taxes are tolling the death knell for the hotel industry. This is truly unfair, since hotels serving liquor generate the second highest revenue for the state exchequer."

Soaring high

Brands	Goa	Mumbai
Blender's Pride	375	875
McDowell	190	580
Imperial Blue	150u00a0	500
Royal Stag	190	600
Signature	375	875

Brand (180ml)	Old MRP	New MRP	Hike Per cent
Signature (Blender's Pride)	165	220	33.3
Royal Stag	105	150	45
McDowell No 1	100	145	45
Imperial Blue	80	125	55
Bagpiper	65	99	50
Kingfisher Beer (650 ml bottle)	80	95	20
Mild beer	77	95	25