writ petition (civil) no. of 2016 public interest...

IN THE HON’BLE HIGH COURT OF DELHI AT NEW DELHI

Extraordinary Civil Original Writ Jurisdiction

Writ Petition (Civil) No. OF 2016

PUBLIC INTEREST LITIGATION

In the matter of:

Anish Agarwal & Anr. ...…PETITIONERS

VERSUS

Government of NCT of Delhi & Ors. .......RESPONDENTS

INDEX

S. No Particulars Page no

1. Listing Proforma

2. Notice of Motion

3. Urgent Application

4. Memo of Parties

5. Consolidated Court Fee

6. List of Dates

7. Writ Petition under Article 226 of the

Constitution of India, along with affidavit.

8. Annexure 1:A copy of the Public Interest

Litigation No. 24471 of 2016 filed before the

Hon’ble High Court of Judicature at

Allahabad on May 18, 2016.

9. Annexure No. 2: Copy of the Order dated

26.5.2016 passed by the Hon’ble High Court

of Judicature at Allahabad in Public Interest

Litigation No. 24471 of 2016.

10. Annexure No. 3:Copy of the invoices

collected by the Petitioners evidencing that

taxes at rates higher than the prescribed

rates are being charged by the restaurants.

11. Annexure No. 4:A copy of the letter dated

July 2, 2016 sent to the Commissioner of

Value Added Tax, Department of Trade &

Taxes, Government of NCT of Delhi.

12. Annexure No. 5: A copy of the Service Tax

(Determination of Value) Rules, 2006.

13. Application under Article 226 of

Constitution of India for Interim Relief

and Directions

14. Vakalatnama

Date –08.08.2016 Counsel for the Petitioners

Place – New Delhi

Satyam Thareja Enrol. No. D/1050/2012

B-201, Priyadarshini Apartments, 17, Parparganj, Delhi-110092

Mob - 9711097019





In the matter of:


VERSUS


URGENT APPLICATION

To,

The Registrar,

High Court of Delhi,

New Delhi.

Sir,

Will you kindly treat the accompanying Writ Petition as an

urgent one. The ground of urgency is mentioned in the prayer

of the Writ Petition and Application for Directions.


Place – New Delhi



Mob – 9711097019





In the matter of:


VERSUS


NOTICE OF MOTION

To

The Counsel for Respondents

Sir,

The present Writ Petition (being filed in public interest) is likely

to come up for hearing on 10.08.2016 or any day thereafter.


Place – New Delhi



Mob - 9711097019





In the matter of:


VERSUS


PUBLIC INTEREST LITIGATION UNDER ARTICLE 226 OF

THE CONSTITUTION OF INDIA PRAYING FOR ISSUANCE

OF WRIT ORDERS OR DIRECTIONS IN THE NATURE OF

MANDAMUS DIRECTING THE RESPONDENTS TO TAKE

EFFECTIVE STEPS AGAINST RESTAURANTS CHARGING

VALUE ADDED TAX AND / OR SERVICE TAX IN EXCESS OF

WHAT IS PROVIDED IN ACCORDANCE WITH LAW AND

FURTHER DECLARING THAT VAT CAN BE CHARGED ONLY

IN RELATION TO THE GOODS COMPONENT, SERVICE TAX

CAN BE CHARGED ONLY IN RELATION TO THE SERVICE

COMPONENT AND THAT THE SUM OF GOODS

COMPONENT AND SERVICE COMPONENT CAN IN NO

INSTANCE EXCEED TOTAL VALUE OF THE INVOICE

MEMO OF PARTIES

1. Anish Agarwal

21, Sammelan Marg,

Allahabad – 211003………………………...Petitioner No. 1

2. Avi Tandon

3, Patrika Marg, Civil Lines,

Allahabad – 211001………………………..Petitioner No. 2

VERSUS

1. Government of NCT of Delhi,

Through its Principal Secretary,

Department of Finance

4th Level, A Wing, Delhi Secretariat,

IP Estate, New Delhi 110002…………...Respondent No. 1

2. The Commissioner of Value Added Tax

Department of Trade & Taxes,

2nd Floor , Vyapar Bhawan, New Delhi..Respondent No. 2

3. Union of India,

Through its Principal Secretary,

Ministry of Finance,

Department of Indirect Taxes (Service Tax),

North Block, Central Secretariat,

New Delhi 110001……………………….Respondent No. 3

4. Chairman, Central Board of Excise and Customs,

Department of Revenue,

Ministry of Finance,

Government of India,

North Block, Central Secretariat,

New Delhi 110001……………………….Respondent No. 4

5. Chief Commissioner of Service Tax,

Delhi Zone, C.R. Building, I.P. Estate,

New Delhi – 110009…………………..…Respondent No. 5


Place – New Delhi



Mob - 9711097019

.

LIST OF DATES

DATES RELEVANT EVENTS

NIL The Government of National Capital Territory of

Delhi levies VAT on sale of goods (at the rate of

20% on the sale of liquor and aerated drinks and

at the rate of 12.5% on goods being food and

other beverages given in a restaurant). The

Union of India levies service tax on services

involved in supply of food in a restaurant at the

rate of 15%).

NIL The Petitioners noticed various (almost all) are

charging VAT on the entire invoice value and

also service tax at the rate of 6%. This practice is

noticed in almost every restaurant and is the

prevalent market practice.

NIL Pursuant to Sections 89(1)(a), 89(1)(b) and

89(1)(c) of the Delhi Value Added Tax Act, 2004,

in case any dealer knowingly keeps false

accounts or issues false invoice, he shall be

liable to be punished with imprisonment for a

term which may extend to six months of rigorous

imprisonment and with fine.

May 18,

2016

The Petitioners filed a writ petition in relation to a

similar matter in the Hon’ble High Court of

Judicature at Allahabad and the Hon’ble High

Court was pleased to pass an order on May 26,

2016 permitting the Respondents to file counter

affidavit in the matter. The matter is pending

before the Hon’ble Allahabad High Court.

June 2016 The Petitioners collected some sample invoices

evidencing the fact that restaurants are charging

VAT even on the service component of their

invoices.

July 2, 2016 The Petitioners wrote a letter to the

Commissioner of Value Added Tax, Department

of Trade & Taxes, Government of NCT of Delhi

requesting appropriate action against such

restaurants for charging VAT even on the service

tax component of the invoices.

NIL The Petitioners have not received any response

from the Commissioner of Value Added Tax,

Department of Trade & Taxes, Government of

NCT of Delhi. The Government of NCT of Delhi

is a direct beneficiary from this illegal activity.

Hence it may be possible that the VAT

Authorities are deliberately not taking any action

against such excess and illegal tax that is being

charged by the restaurants.

July, 2016 Hence, the present petition


Place – New Delhi



Mob - 9711097019


Civil Original Extraordinary Writ Jurisdiction


In the matter of:

Public Interest Litigation under

Article 226 of the Constitution of India

and

In the matter of:


VERSUS


PUBLIC INTEREST LITIGATION UNDER ARTICLE 226 OF

THE CONSTITUTION OF INDIA PRAYING FOR ISSUANCE

OF WRIT ORDERS OR DIRECTIONS IN THE NATURE OF

MANDAMUS DIRECTING THE RESPONDENTS TO TAKE

EFFECTIVE STEPS AGAINST RESTAURANTS CHARGING

VALUE ADDED TAX AND / OR SERVICE TAX IN EXCESS OF

WHAT IS PROVIDED IN ACCORDANCE WITH LAW AND

FURTHER DECLARING THAT VAT CAN BE CHARGED ONLY

IN RELATION TO THE GOODS COMPONENT, SERVICE TAX

CAN BE CHARGED ONLY IN RELATION TO THE SERVICE

COMPONENT AND THAT THE SUM OF GOODS

COMPONENT AND SERVICE COMPONENT CAN IN NO

INSTANCE EXCEED TOTAL VALUE OF THE INVOICE

TO,

THE HON’BLE CHIEF JUSTICE

AND HIS COMPANION JUSTICES

OF THE HON’BLE HIGH COURT OF DELHI

THE HUMBLE PETITION

OF THE ABOVE NAMED PETITIONERS.

MOST RESPECTFULLY SHOWETH:

1. The writ petitioners have no personal interest in the

litigation. The Petition is not guided by self-gain or for gain

of any other person / institution / body and that there is no

motive other than of public interest in filing the writ

petition.

2. The Petitioners are advocates and are accordingly aware

about the law relating to Value Added Tax and Service

Tax. The Petitioners have, during the course of several

restaurant visits, noticed that most of the restaurants are

imposing taxes in excess of what has been provided by

law. Accordingly, the Petitioners have collected some bills

evidencing the same. The various laws applicable and

their interpretation as given by various courts including

the Hon’ble Supreme Court of India clarify that the taxes

collected by the restaurants are in excess of what has

been authorized by law and accordingly taxes are being

collected without the authority of law.

3. The consumers as a class will be the primary

beneficiaries of this Public Interest Litigation. It is common

knowledge that contesting matters before Courts is

expensive and accordingly, contesting imposition of small

amounts on each and every bill by consumers is neither

financially viable nor practical. However, together, the

consumers are being made to pay a huge amount of tax,

all without authority of law.

4. The Union of India and the Government of NCT of Delhi

are directly involved in the matter because service tax

and value added tax is collected by them. If this Hon’ble

Court holds that the taxes are being collected without the

authority of law, the total amount collected by the Union of

India / the Government of NCT of Delhi would be affected.

Accordingly, the Union of India and the Government of

NCT of Delhi together with the relevant secretaries,

commissioners and departments have been made as

parties in the present Public Interest Litigation.

Restaurants as such would also may be affected as the

total amounts of tax which is required to be charged by

the restaurants pursuant to the extant laws would be

determined by this Hon’ble Court in this Public Interest

Litigation. However, this determination would not affect

the restaurants adversely as (i) the restaurants recover

the entire amount of tax from their customers; and (ii) as

the Petitioners are praying for reduction in the total

amount of tax which cannot have an adverse affect on the

restaurants. In case any proceedings are initiated against

restaurants for illegally collecting tax in excess of what is

provided in law, those proceedings will be separate and

the restaurants will certainly get a chance to defend

themselves. Additionally, the Petitioners are not praying

for determination of liability of any of the restaurants and

accordingly, making the restaurants as a party in this

Public Interest Litigation would not be helpful. Lastly,

given the number of restaurants, making all the

restaurants as parties would neither be in the interests of

justice nor be practical.

5. The Petitioners are advocates practicing in various

Hon’ble Courts in India including primarily the Hon’ble

Supreme Court of India. The Petitioners have completed

LL.B. (Business Law Hons.) from National Law University,

Jodhpur in the year 2012. Petitioner No. 1 completed his

LL.M. from Harvard Law School in the year 2015 and

Petitioner No. 2 completed his B.C.L. from the University

of Oxford in the year 2013. The Petitioners have always

been associated with Legal Aid endeavors at the Law

School and University levels.Accordingly, the Petitioners

are adequately equipped in assisting this Hon’ble Court

and have the competence to espouse the cause raised in

this Petition. The Petitionershave the means to pay the

costs, if any, imposed by the Court and undertake to

make best endeavors to abide by the orders of this

Hon’ble Court.

6. The Petitioners wrote a letter dated July 2, 2016 to The

Commissioner of Value Added Tax, Department of Trade

& Taxes, Government of NCT of Delhi requesting them to

take action against these restaurants for charging

amounts in excess of what has been authorized by law.

However, the Petitioners have not received any response

from as of date, nor, to the best of Petitioners knowledge

any public clarification has been issued by the

Commissioner. Given that the Government of NCT of

Delhi is a direct beneficiary from this illegal collection of

taxes, it is quite possible that it does not want to take any

action against such illegal collection of taxes.

7. The Petitioners have already filed a Public Interest

Litigation in relation to a same issue (within the territory of

Uttar Pradesh) before the Hon’ble High Court of

Judicature at Allahabad on May 18, 2016 beingPublic

Interest Litigation (PIL) No. 24471 of 2016titled “Anish

Agarwal and Anr. v. State of Uttar Pradesh and 4

Ors.”and the Hon’ble Allahabad High Court vide its order

dated May 26, 2016 had granted a period of 4 weeks to

the Respondents to file counter affidavit in the matter.

8. That it is submitted that no Writ Petition, Application

including Review Application etc. or any other

proceedings arising from or related to relief sought in the

instant matter has been filed by the Petitioner, or is

pending before this Hon’ble Court or any other Court

within jurisdiction of this Hon’ble High Court or Supreme

Court of India. It is submitted that the Petitioner has not

received any notice, information or copy of any Caveat

Application by registered post or otherwise from any of

the Respondents/Opposite Parties or from any other

source. It is hereby clarifed that although the writ petition

filed in Allahabad High Court is in relation to the same

issue, the territorial jurisdiction of the two courts are

different and accordingly, the nature of relief that would

be provided by the two courts would be entirely different.

9. This is a civil writ petition being a public inteerst litigation

under article 226 of the Constitution of India praying for

issuance of a writ of mandamus directing Respondents 1

and 2 to take appropriate action against restaurants

charging value added tax on the service component of

their invoices and directing the respondents to give wide

publicity to the fact that value added tax is required to be

levied only on the goods component of invoices being

60% of the invoice issued by restaurants and that value

added tax cannot be issued on the service component

[being 40% as per the Service Tax (Determination of

Vlaue) Rules, 2006]. Alternatively, In case this Hon’ble

Court holds that the goods component of invoices issued

by restaurants is more than 60% of the invoice value,

then it is prayed that this Hon’ble Court may declare rule

2C of the Service Tax (Determination of Value) Rules,

2006 as ultra vires the Constitution of India and issue a

writ of mandamus directing the Central Government to

give wide publicity to the same so that restaurants do not

charge service tax on goods component of their invoices.

10. That the Government of NCT of Delhi levies a tax on the

sale of goods under the Delhi Value Added Tax Act,

2004. The Union of India levies a tax on services under

the Finance Act, 1994.

11. That in accordance with Section 4(1)(c) of the Delhi Value

Added Tax Act, 2004 (hereinafter “VAT Act”), goods

specified in Schedule IV of the VAT Act are chargeable to

tax at the rate of 20%. Schedule IV of the VAT Act

provides for Liquor (Foreign, Indian Made Foreign Liquor

and Country Liquor) and Aerated Drinks. Accoridngly,

VAT at the rate of 20% is charged on sale of goods being

liquor and aerated drinks. In accordance with Section

4(1)(e) of the VAT Act, goods not specified in the

Schedules are chargeable to tax at the rate of 12.5%.

Therefore, sale of goods being food and other beverages

served at restaurants is chargeable to tax at the rate of

12.5%.

12. That in accordance with Section 66B, service tax is levied

at the rate of 14% on all services other than those

mentioned in the negative list. Further, in accordance with

Section 119 of the Finance Act, 2015 read with

Notification No. 22/2015-Service Tax dated November 6,

2015, a Swach Bharat Cess is levied at the rate of 0.5%

on all taxable services. Further, in accordance with

Section 161 of the Finance Act, 2016, a Krishi Kalyan

Cess is levied at the rate of 0.5% on all taxable services.

Food or any other article of human consumption sold at

restaurants is not specified in the negative list. Therefore

the effective rate of service tax on services provided in

restaurants is 15%.

13. In accordance with Rule 2C of the Service Tax

(Determination of Value) Rules, 2006 the Central

Government has notified the method for determination of

value of service portion involved in the supply of food or

any other article of human consumption or any drink in a

restaurant. Pursuant to Rule 2C of the Valuation Rules,

40% of the total amount is considered as service.

Therefore, as per the Service Tax (Determination of

Value) Rules, 2006, service tax of 6% (40% of 15%) is

applicable on the total value of transactions relating to

supply of food or any other article of human consumption.

14. That the Government of NCT of Delhi has not released

any guidelines similar to the Service Tax (Determination

of Value) Rules, 2006 for determination of value of the

goods component in relation to the invoices raised by

restaurants.

15. That various restaurants in the National Capital Territory

of Delhi are charging (i) VAT at the rate of 20% for liquor

and aerated drinks and 12.5% on food and other

beverages; and (ii) service tax at the rate of 6%; on total

invoice value in relation to food and other articles of

human consumption.

16. That, mathematically, 6% is 40% of 15%. Therefore, the

restaurants are charging (i) service tax at the rate of 15%

on the service portion of the invoice; and (ii) VAT at the

rate of 20% (for liquor and aerated drinks) and 12.5% (for

food and other beverages) on the entire invoice value.

Effectively, restaurants are charging VAT even on their

admitted portion of services (that portion which the

restaurants are admitting is a service) in relation to food

and other items of human consumption sold by them.

17. That the Petitioners informed various Value Added Tax

Authorities about these violations by restaurants,

however, to the best of Petitioners’ knowledge, no action

has been taken by them.

18. That in relationt the same issue in the context of Uttar

Pradesh, the Petitioners have already filed a Public

Interest Litigation in the Allahabad High Court on May 18,

2016. A copy of the Petition filed with the Allahabad High

Court is annexed herewith and marked as Annexure 1. A

copy of the order passed by the Hon’ble High Court of

judicature at Allahabad is annexed herewith and marked

as Annexure 2.

19. That the Petitioners collected invoices from different

restaurants (annexed herewith and marked as Annexure

3) and wrote to the Commissioner of Value Added Tax,

Department of Trade & Taxes, Government of NCTabout

these violations together with a copy of the invoices for

the purpose of evidence (annexed herewith and marked

as Annexure 4).

20. That, to the best of knowledge of the Petitioners, no

action has been taken by the Commissioner of Value

Added Tax, Department of Trade & Taxes, Government

of NCTagainst such violations by the restaurants.

21. That the present Writ Petition is being filed by way of

Public Interest Litigation and the Petitioners do not have

any personal interest in the matter. This petition is in fact

being filed in the interest of consumers of the National

Capital Territory of Delhi at large and also to safeguard

monetary and economic interests of the National Capital

Territory of Delhi.

22. That it appears that the Government of NCT of Delhi and

the Commissioner of Value Added Tax, Department of

Trade & Taxes, Government of NCTare well aware these

flagrant violations of the VAT Act. However no action is

being taken as this entire activity benefits the Government

of NCT of Delhi.

23. That the Petitioners are not aware whether Respondents

1 and 2 consider it appropriate for restaurants to charge

VAT on the entire value of invoice in relation to food and

other items of human consumption sold by restaurants.

24. That alternatively, in case it is held that the transaction

involving sale of food or any other items of human

consumption does not include any service component or

the service component is less than 40%, Rule 2C of the

Service Tax (Determination of Value) Rules, 2006 would

be ultra vires the Constitution of India and the Finance

Act, 1994. A copy of the Service Tax (Determination of

Value) Rules, 2006 is attached herewith and marked as

as Annexure 5.

25. That the Petitioners have not filed any other similar

Petition in this Hon’ble Court. Although a similar petition

has been filed by the Petitioners in the High Court for

Judicature at Allahabad, the scope of that petition is in

relation to illegal collection of tax under the Uttar Pradesh

Value Added Tax Act, 2008 and as such the cause of

action and the territorial jurisdiction in the two petitions

are separate.

26. That this Hon’ble Court has jurisdiction to entertain the

present petition under Article 226 of Constitution of India.

27. That since the Respondents 1 and 2 have failed to

discharge their statutory and constitutional obligations the

Petitioner does not have any other alternative and equally

efficacious remedy and is constrained to file the instant

Writ Petition in the nature of a PIL, on the following

amongst other:-

GROUNDS

A. Because the present writ petition is pro bono publico in

which the Petitioner has no personal interest in the matter

or the reliefs sought herein.

B. Because the actions of the restaurants are in clear

violation of the VAT Act and Article 265 of the Constitution

of India.

C. Because the effective rate of tax being charged from the

customers at restaurants is 20 + 6 = 26% (for liquor and

aerated drinks) and 12.5 + 6 = 18.5% (for food and other

beverages). Charging 26% (for liquor and aerated drinks)

and 18.5% (for food and other beverages) tax on food

and other articles of human consumption sold at

restaurants is wholly without the authority of law.

D. Because a contract for providing food or any other article

of human consumption at a restaurant is contract divisible

into goods component and service component by virtue of

the legal fiction created by Article 366(29A)(f) of

Constitutio of India. Accordingly, tax on sale of goods can

be imposed on the sale component and service tax can

be imposed on the service component.

E. Because the Hon’ble Supreme Court of India in the case

of BSNL v. Union of India (2006) 3 SCC 1 (3 Judge

Bench) has held that after the Forty-sixth Amendment to

the Constitution of India, the sale element of those

contracts which are covered by the six sub-clauses of

clause (29-A) of Article 366 of Constiution of India are

separable and there is no question of the dominant nature

test applying.

F. Because Art. 366(29A)(f) of Constitution of India squarely

covers good or any other articles for human consumption

or any drink (whether or not intoxicating) supplied by

restaurants. Therefore, such contracts are divisible under

the legal fiction created by Art. 366(29A)(f) into contract

for sale and contract for service.

G. Because although a contract can have both sale

component and a service component, service component

of a contract does not contain any sale component and

sale component of a contract does not contain any

service component.

H. Because the Hon’ble Supreme Court in the case of BSNL

supra [at para 88] has unequivocally clarified this issue in

relation to levy of sales tax on the services component as

follows:

“No one denies the legislative competence of the

States to levy sales tax on sales provided that the

necessary concomitants of a sale are present in the

transaction and the sale is distinctly discernible in

the transaction. This does not however allow the

State to entrench upon the Union List and tax

services by including the cost of such service in the

value of the goods.”

I. Because similarly, the Hon’ble Supreme Court in the case

of Imagic Creative (P) Ltd. v. Commissioner of

Commercial Taxes and Others (2008) 2 SCC 614 [at para

32] held as follows:

“Payments of service tax as also VAT are mutually

exclusive. Therefore, they should be held to be

applicable having regard to the respective

parameters of service tax and the sales tax as

envisaged in a composite contract as

contradistinguished from an indivisible contract. It

may consist of different elements providing for

attracting different nature of levy. It is, therefore,

difficult to hold that in a case of this nature, sales

tax would be payable on the value of the entire

contract, irrespective of the element of service

provided.”

J. Because Sections 89(1)(a), 89(1)(b) and 89(1)(c) of the

Delhi Value Added Tax Act, 2004, in case any dealer

knowingly keeps false accounts or issues false invoice,

he shall be liable to be punished with imprisonment for a

term which may extend to six months of rigorous

imprisonment and with fine. By charging service tax, the

dealer is admittedly declaring that there is a service

component in the invoice.Therefore, charging VAT on the

entire value of the invoice seems to be a flagrant violation

of the Delhi Value Added Tax Act, 2004.

K. Because Article 265 of the Constitution of India clearly

provides that no tax shall be levied or collected except by

authority of law.

L. Because Respondents 1 and 2 are under an obligation to

enforce the provisions of VAT Act and uphold the

Constitution of India as such.

M. Because Respondents 1 and 2 have failed in their duty to

protect the interests of consumers.

N. Because alternatively if, assuming without conceding that

the supply of food and other articles of human

consumption do not involve 40% of services, the Service

Tax (Determination of Value) Rules, 2006 would be ultra

vires the Constitution of India and the Finance Act, 1994

as they would be intending to impose service tax on

goods component of the invoice.

O. Because alternatively, assuming without conceding, that

the contract is not divisible even under the fiction created

by Article 366(29), then the dominant nature test as

propounded by the Hon’ble Supreme Court of India in the

case of BSNL supra would apply and either service tax or

VAT would be chargeable (depending on whether service

is the dominant component or sale is the dominant

component). However, both service tax and VAT would

not be applicable.

P. Because lack of appropriate guidelines for determination

of goods component of the invoice by the Government of

NCT of Delhi cannot permit the restaurants to charge both

service tax and tax on sale of goods on the same

component.

Q. Because the Respondents have failed to discharge their

constitutional duties.

R. Because the action/inaction of the Respondents is

demonstrably violative of Article 265 of the Constitution of

India.

S. Because customers of restaurants effectively do not have

any remedy against these collusive strategies by the

restaurants and the Respondents.

T. Because it is the fundamental duty of every Indian citizen,

to safeguard public property and to espouse the cause of

the public at large.

PRAYER

It is, therefore, most respectfully prayed that this Hon’ble Court

may graciously be pleased:

(i) To issue a writ, order or direction in the nature of

mandamus, directing Respondent No. 1 and 2 to take

appropriate action against restaurants for charging VAT

on the service component of the invoices raised by them

in relation to supply of food or other articles of human

consumption and any drink (whether or not intoxicating)

which is in contravention to the provisions of the Delhi

Value Added Tax Act, 2008 and the Constitution of India

and is punishable under sections89(1)(a), 89(1)(b) and

89(1)(c) of the Delhi Value Added Tax Act, 2004 with

imprisonment for a term which may extend to six months

of rigorous imprisonment and with fine.

(ii) To declare that VAT can be collected only in relation to

the goods component of an invoice and VAT cannot be

collected in relation to the service component of an

invoice.

(iii) To issue a writ, order or direction in the nature of

mandamus, directing Respondent No. 1 and 2 to widely

publicize to the public at large by way of a circular,

advertisement, press note or any other appropriate

method that VAT can be collected only on the goods

component (being 60% or such other percentage, as may

be determined by this Hon’ble Court, of the total value) of

the invoice raised by restaurants on supply of food or

other articles of human consumption or any drink

(whether or not intoxicating) and that the effective rate of

VAT currently applicable in case of restaurants is 12%

(for liquor and aerated drinks) and7.5% (for food and

other beverages) of the total amount charged or such

other value as may be determined by this Hon’ble Court;

(iv) To issue a writ, order or direction in the nature of

mandamus, restraining the Respondent Nos. 1 & 2 from

levying sales tax in relation to service component and

Respondent Nos. 3, 4 and 5 from levying service tax in

relation to sale component of invoices raised by

restaurants on supply of food or other articles of human

consumption or any drink (whether or not intoxicating).

(v) To issue a writ, order or direction in the nature of

mandamus, directing the Respondents to follow an

appropriate method of valuation of service component

and goods component in relation to invoices raised by

restaurants on supply of food or other articles of human

consumption or any drink (whether or not intoxicating), as

may be determined by this Hon’ble Court.

(vi) To issue a writ, order or direction in the nature of

mandamus, directing the Respondents to widely publicize

to the public at large by way of a circular, advertisement

or any other appropriate manner the method for valuation

of service component and goods component in relation to

invoices raised by restaurants as may be determined by

this Hon’ble Court;

(vii) To issue a writ, order or direction in the nature of

mandamus, restraining the Respondents from devising or

adopting any method of valuation whereby the sum of (i)

goods component and (ii) service component exceeds

gross value of the invoice.

(viii) Alternatively, to issue an order, declaration or direction

declaring Rule 2C of the Service Tax (Determination of

Value) Rules, 2006 as ultra vires the Finance Act, 1994

and the Constitution of India, and issue a writ, order or

direction in the nature of mandamus, restraining the

Respondents from enforcing Rule 2C of the Service Tax

(Determination of Value) Rules, 2006 if the service

component in relation to supply of food or any other

article of human consumption and any drink (whether or

not intoxicating) being provided in a restaurant is less

than 40% of the total value charged by the restaurant.

(ix) To issue any other appropriate writ, order or direction

which this Hon’ble Court deems just and proper, in the

facts and circumstances of the present matter.

(x) The costs of the writ petition may also be awarded in

favour of the Petitioners.


Place – New Delhi



Mob - 9711097019

writ petition (civil) no. of 2016 public interest...

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