27 April 2015
Hi There is a restaurant that has opted for abatement under service tax, i.e it levies service tax @ 40% of bill amount. It simultaneously avails 100% CENVAT credit. Now they have received a show cause notice for the same. I would like to know whether a restaurant can claim full CENVAT credit in case of abatement or the credit has to be claimed propotionately ? (i.e. @ 40%). Kindly guide on the same as soon as possible
27 April 2015
100% cenvat credit can be availed provided it is input service. the service of restaurant is “service” only to the extent of “service portion involved in supply of foods/beverages” which is quantified though not defined, to be 40% of the total amount. CENVAT credit of the services used to provide the same can be availed if those qualify to be input service within the meaning of Rule 2(l) of the credit rules. See the link.
CAclubindia
