The Ministry of Finance has clarified that only restaurants and eating places that have air-conditioning can charge service tax. And the tax will be levied on only 40% of the amount charged.
- Restaurants, eating joints or messes which do not have air-conditioning or central air-heating in any part of the establishment are exempt from service tax.
Service Tax in India is an indirect tax paid on services provided in the country. According to Finance Act 1994, all service providers of the country except in J&K have to pay service tax. Current service tax is 14%. This tax would be applicable on services except the negative list of services. It is levied by the central government.
Sources: the Hindu, Wiki, finmin.