Thanks to a recent development, the state government of Kerala could possibly pick up the mantle as the first state to act against hotels that are yet to register for GST.
The state has chalked out a legal proceeding to act against hotels that are yet to register for GST, but still collect taxes from patrons.
An officer said, "It has come to the department's notice that tax is being levied illegally on consumers across the state by hotels and restaurants without GST registration and those which have opted for composite tax assessment. The department will initiate state-wide inspections in the coming days."
Hotels with annual turnover beyond Rs 20 lakh are mandated to register and collect GST. Currently non-ac hotels and restaurants collect a 12% tax while ac establishments can collect 18% GST.
The official said that those hotels who have opted for composite tax assessment cannot collect GST.
The law clearly defines that only registered entities can collect tax but there have been cases where disgruntled customers have complained hotels of flouting the rule.
Such cases are not isolated to Kerala alone. A look around on Twitter, and there are multiple users complaining of hotels charging GST in spite the rule dissuading them from doing so.
Here is one from Jabalpur, Madhya Pradesh:
Honourable Mr CM..sr still with gst implemented hotel has declined to reduce service charge..pls act..— Mahendra SinghThakur (@Mahendr34464924) September 26, 2017
Jabalpur hotel satya ashoka pic.twitter.com/6qgYUCon6N
Food cost has naturally risen post GST. A user tweets a humorous take.
Even booking through apps like Ibibo is confusing.
@goibibo why you have made in your booking voucher to pay 26% GST when it was prescribed 18% in that slab of hotel booking? Transparency..,?— Vineet Kumar Singh (@vineetksingh88) September 23, 2017