AC bars, hotels threaten to go on strike

They are demanding that the Finance Minister revoke the newly-imposed service tax on customers for drinking in an AC hotel

Soon, in addition to not being able to shop, you may not be able to beat the heat by heading to your favourite AC bar/hotel for a drink.


The hotel industry claims it's are already reeling under inflation and price
rise. Customers will prefer drinking at roadside joints, it fears.

After garment firms declared a shutdown of retail stores in the city on Monday against the 10 per cent excise duty on branded readymade garments (as reported by MiDDAY on Friday), AC restaurants and bars across Maharashtra may follow suit.

They have sent a letter to Finance Minister Pranab Mukherjee asking him to revoke the newly-imposed 10.3 per cent service tax that will be levied on customers for drinking alcohol in an AC bar or hotel. Else, they threaten to go on a strike.

Restaurants across Maharashtra have written a letter to Mukherjee asking him to revoke it. According to them, this new tax will sound the death knell for the hotel industry, which is already reeling from inflation and price rise of food products.

"The hotel industry will not be able to bear this additional burden. Customers will prefer visiting roadside joints, and revenue to both, the government and restaurants will be deprived," says Sudhakar Shetty, President of the Indian Hotel and Restaurant Association. The association has more than 8,000 restaurants as its members.

Restaurant associations across Maharashtra, including those in Navi Mumbai, Thane and Pune, have come out in support. "Consumers are already charged value added tax (VAT) on their bills. A service tax on the same bill will amount to double taxation," he adds.

Kishore Shetty, President of the Navi Mumbai Hotel Owners Association, says, "If the FM is unable to take a decision in our favour, we may think of calling for a strike, like the garment industry did. We will, however, take this decision uniformly".

It is not just the hotel industry, but also customers, who are against the imposition of service tax.u00a0 Nirvan Deshmukh, a businessman from Sion, says, "Imposing VAT has already proved expensive. Now this service tax will burn an even bigger hole in our pockets. It might be better to drink at home rather than visit a restaurant."

But Sudhakar Shetty is hopeful. He recollects the year 1988-89, when a component (in that year's budget by then Finance Minister Manmohan Singh) called expenditure tax was revoked, after the hotel industry objected.u00a0

He says, "Mumbai is a coastal city. The humidity causes a lot of inconvenience to customers, and ACs are a necessity, not a luxury."