HRAWI OPPOSES THE BAN; TERMS THE DECISION ARBITRARY & HARMFUL FOR TOURISM

Daman Administration Bans Live Orchestra Performances

In Hotels & Restaurants

Daman: The office of Deputy Collector of Daman has recently issued a circular revoking permit for live orchestras in hotels, bars and restaurants. The reason for the ban has been cited as a way of preventing Daman from becoming a hub for prostitution and other illegal activities. The Hotel and Restaurant Association of Western India (HRAWI), terming the move as arbitrary, without basis and effectively harmful for tourism, has opposed the ban.

“The administration claims that there may be cases of prostitution and illegal activities taking place under the pretext of live orchestras. But this is baseless and merely presumptive. Concluding that all live orchestras are indulging in such practices is arbitrary and sets a bad precedent. Many hotels and restaurants that have heavily invested both capital and time for setting up infrastructures are now in a soup on account of this ban,” says Mr. Bharat Malkani, President, HRAWI.

Last year the Daman administration had formulated a policy of allowing orchestras for entertainment of visitors. Quite a few hotels in the region had obtained the licenses for the same, mainly in Dabhel and Bhimpore.

“Hoteliers and restaurateurs are in a fix. They invest in businesses and projects based on stable Government policies. Every enterprise is built around projected returns on investment. But if policies are changed arbitrarily, they will not be able to plan for future. In specific relation to this ban, many hoteliers had invested in artist promotion and popularizing the concept of live orchestra. With this immediate ban, not only the enterprises will begin to incur losses immediately but also tourism as a whole will be hampered. With New Years eve just a month away, a sudden jerk in the mechanism of hospitality will certainly be a cause for tourists to withdraw their visits and/or stays from here to other places, eventually resulting into deficit in revenues for the state’s coffers as well,” he adds.

“We stand by the administration for its stance against illegal activities under the disguise of live performances. The law should be vigilant and should take action against erring establishments who bring a bad name to the region and tarnish the reputation of tourism in the state. However at the same time, we request the administration to look at the flip side of the decision and reconsider banning all the establishments from conducting business ethically,” concludes Mr. Malkani.

HRAWI TO MEET CHIEF MINISTER WITH WISHLIST FOR HOSPITALITY SECTOR

 New Government in Maharashtra Brings Hope To The Beleaguered Hospitality Industry

Mumbai: The hospitality sector, which is going through one of its worst ever economic downswings, is hoping for a reversal of trends with the formation of the new Government in Maharashtra. It is expecting the introduction of rational policies and stronger infrastructure creation that will go on to boost the tourism and hospitality industry in the State.

“As soon as the Government settles in, we will be meeting the Chief Minister and the Tourism Minister with vision for the hospitality industry. In the last twenty-five years every successive Government has regularly raised taxes, introduced new taxes and increased procedural requirements. In turn, the industry has suffered. Our request from the new Government is that the tax structure and policies be rationalized; otherwise, the hospitality sector which is bleeding badly, will bleed to death,” says Mr. Bharat Malkani, President, Hotel & Restaurant Association of Western India (HRAWI), the apex body of hotels and restaurants.

The association has identified seven key issues that it would take up with the Chief Minister on behalf of the hotel industry.  The issues include single window clearance for licenses; eliminating duplication of certificates that need to be taken from Food Safety & Standards Authority of India (FSSAI) and local bodies, municipality and municipal corporations; rationalization of room rates by increasing hotel rooms; developing  Swachh Bharat and sewage treatment policies for cities and towns; skill development through the ‘Hunnar Se Rozgar’ program and apprentice harmonization; rationalization of entertainment tax and the capital value tax system.

Talking about the industry’s existing scenario Mr. Malkani says, “Currently, all kind of direct and indirect taxes are levied on the hospitality industry. Some of the taxes like (entertainment tax and luxury tax) amount to duplication and some like the new property tax valuation system are irrational. For every four nights a tourist stay in Mumbai the tourist pays one additional night stay in taxes alone! This makes staying in Mumbai prohibitive for tourists and they use the city merely as a transit point instead of as a tourist destination like most other cities in the world.”

Another challenge the industry has been facing is that new laws are not replacing existing ones, but duplicating them... Post introduction of the FSSAI Act, it became obligatory on all Food business Operators (FBOs) to acquire license under this Act. “But this did not trickle down to the local bodies and Municipalities. FBOs now need licenses from both the Health departments and under the FSSAI Act, which amounts to duplication. While we have been appealing to the Government to provide guidelines to the local bodies on the FSSAI Act, the nature of the problem reemphasizes the need for Single window clearance for hotels,” elaborates Mr. Malkani.

 “The hospitality industry is the highest creator of jobs, is the highest tax generating source, one of the highest foreign exchange earners and one whose growth trajectory can outpace the growth of several other industries put together. With a little bit of vision and support from the Government, this industry can easily increase its contribution to the GDP and play a much bigger role in its progress,” concludes Mr. Bharat Malkani.

About Hotel & Restaurant Association Western India (HRAWI)

The Hotel and Restaurant Association (Western India) is a 64 years old Association of Hotels and Restaurants in Western India. Its members include smaller Hotels up to 5-Star Deluxe categories. The bulk of its members, like any growth economy is made up of budget hotels. With around 1300 members across Western India, HRAWI covers Maharashtra, Gujarat, Madhya Pradesh, Chhattisgarh, Goa and the Union Territories of Daman, Diu & Silvassa, and is considered to be the voice of the Hotel Industry. The association is part of the national body of Federation of the Hotels & Restaurants Associations of India (FHRAI), located in New Delhi, which was originally founded in Mumbai in 1950 by the late Mr. J.R.D. Tata.

HRAWI ORGANIZES SEMINAR ADDRESSED BY SME’S FOR THE BENEFIT OF HOTELIERS & RESTAURATEURS

VAT, Luxury Tax & Service Tax Demystified For The Hospitality Industry

Mumbai: As part of the initiatives taken for the benefit and awareness of hoteliers and restaurateurs, the Hotel and Restaurant Association of Western India (HRAWI) has organized special seminars to understand the impact of VAT, luxury tax and service tax on various activities of hotels and restaurants. The seminars will be organized for Food Business Operators (FBOs) in various cities of the western region including Mumbai, Pune, Bhopal, Ahmedabad, Goa and others in the coming months. The first seminar held at The Ambassador hotel, Mumbai, yesterday received an overwhelming response from the FBOs. The session on VAT and Luxury Tax was addressed by Shri Govind Goyal, a well-known chartered accountant and Mr. Sheel Bhanushali spoke on matters related to Service Tax.

“The hospitality industry is presently gripped by several harsh policies and; direct and indirect taxation that is hurting the sector. It is very important for everyone in this industry to be abreast of changes and developments taking place from time to time. For this, the association has and will continue to organize such seminars in the interest of our members,” said Mr. Bharat Malkani, President, HRAWI.

During the seminar the Subject Matter Experts (SME) highlighted several laws and policies related to VAT, Luxury Tax and Service Tax. This included the criteria under which taxes are applicable and liability classified based on person, event, rate or value. The seminar also discussed the issues of overlapping of taxes besides giving clarity over taxation based on the types of organization viz Star hotels, club houses, small hotels, sweets and farsan shops, bakeries and catering.

Explaining the basics Mr. Govind G. Goyal said, “Unlike in the past, since 01.04.2005 there is no separate Purchase tax, Turnover tax, Resale tax, Surcharge, Works Contract tax, Lease tax etc. There is only one tax now i.e. the Value Added Tax (VAT). VAT is levied on the turnover of sales of goods at such rate as specified in respective schedules that include Essential commodities that are tax free; gold, silver, precious stones, pearls, etc attract a VAT of 1%, declared goods, industrial inputs, and such other specified goods are charged at the rate of 5%; foreign liquor, country liquor, motor spirits, etc. are the ones that may attract VAT at certain specific rates and all other goods are taxed at 12.5%.” Also highlighting the recent revisions made to the Luxury tax he said, “The Luxury tax is not applicable for hotel rooms for a tariff of up to Rs.1000, between Rs.1001 – Rs.1500 at 4% and exceeding Rs.1500 at 10%.”

Speaking about the Service Tax applicable for the hospitality sector Mr. Sheel Bhanushali explained the various services that various hotels provide activity-wise. Based on whether it provides only accommodation or if it’s a casino or a club membership, he elaborated on the taxes an entity would incur.

Providing clarity on the definition of a Mandap and its tax implications Mr. Bhanushali said, “The definition of mandap is very vide in its coverage and covers all immovable properties let out for organizing social, official or business functions. Hotels and restaurants providing facility like kalyana mandaps or marriage halls, banquet halls, conference halls etc. within their premises for organizing any social, official or any business function shall also be obviously included in the coverage of service tax. Therefore the levy of service tax will apply in all such cases.”

About Hotel & Restaurant Association Western India (HRAWI)

The Hotel and Restaurant Association (Western India) is a 64 years old Association of Hotels and Restaurants in Western India. Its members include smaller Hotels up to 5-Star Deluxe categories. The bulk of its members, like any growth economy is made up of budget hotels. With around 1300 members across Western India, HRAWI covers Maharashtra, Gujarat, Madhya Pradesh, Chhattisgarh, Goa and the Union Territories of Daman, Diu & Silvassa, and is considered to be the voice of the Hotel Industry. The association is part of the national body of Federation of the Hotels & Restaurants Associations of India (FHRAI), located in New Delhi, which was originally founded in Mumbai in 1950 by the late Mr. J.R.D. Tata.