Category Archives: Service Tax

Section 145 Sales estimation- restaurant business

The HImachal Pradesh High Court in New Plaza Restaurant v. ITO (209) 183TAX33 held that the Assessing Officer is bound to follow the same yardstick for similar sorts of business and when it does not follow a uniform practice and applies different yardsticks in similar cases, then such action would be hit by article 14 and becomes arbitrary and capricious. In this case the A O/CIT estimated the sales at 2.5 times the value of the raw material purchased by the assessee whereas in the parallel cases of two other restaurants the sales were estimated at 2.2times multiple so that the assessee challenged such premise. The Court brushed aside the reasoning given in this regard altogether that in respect of over the counter sales in case of one such comparable restaurant for sweet items the consumption of the raw materials was bound to be on the lower side.

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