A plea alleged that Delhi restaurants were charging VAT on the entire bill, thus violating the law.
Delhi High Court on Wednesday asked the AAP government to file its response on a plea alleging that restaurants in Delhi were charging excess value added tax (VAT) on the food and drinks served by them.
A bench of Chief Justice G Rohini and Justice Sangita Dhingra Sehgal also asked the Centre to respond to the plea and fixed the matter for hearing on October 3.
The petition contends that under the rules, VAT is to be levied only on the goods component which is 60 per cent of the bill amount and it cannot be imposed on the remaining 40 per cent service component.
It alleged that the restaurants were charging VAT on the entire bill, including the service component, which is a violation of the law.
The plea sought a direction to the Delhi government and Commissioner of VAT to take appropriate action against the restaurants which charged VAT on the service components.
The petitioners told the court that they had written a letter last month to Delhi Government's Commissioner of VAT requesting them to take action against such restaurants, but had not received any response till date.
"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," the petitioners claimed.
They also sought court's direction to authority concerned to declare that VAT could be collected only in relation to goods component of an invoice and cannot be collected in relation to the service component.
It also claimed that lack of appropriate guidelines for determination of goods component of the invoice by Delhi government cannot permit the restaurants to charge both service tax and tax on sale of goods on the same component.