Cenvat credit

Respected Sir,

Gross Receipt for Restaurant Service = 60 Lakh

Abatement under 26/2012 @ 60%= 36 Lakh

Taxable Amount @ 40%=24 Lakh

Cenvat credit available = 12.50 Lakh

Whether to take 1) cenvat credit of full amount i.e. Rs. 12.5 Lakh or 2) to take proportionate Cenvat Credit i.e. 12.5 Lakh *40%=5 Lakh.

If answer to above question is as per option 2), whether same treatment applies to all abated service covered under NN 26/2012.

Thanks & Regards Ramesh Purbia

Replies (1)

Dear Ramesh

The determination of value of service portion involved in supply of food or any other article of human consumption or any drink in a restaurant or as outdoor catering is fall under service tax (determination of value) rules 2006 sub rule 2C.

As are explanation provided under the rule, it is clarified that the service provider should not take CENVAT credit of duties or cess paid on any goods classifiable under chapters 1 to 22 of the central excise tariff act, 1985.

As you specified that you have CENVAT credit of Rs 12.5 Lakh but not specified this is from payment of duty or form payment of Input service tax.

So if this credit belongs to payment of service tax than you can avail total payment as CENVAT credit without any abatement but if for duty on Input fall under chapter 1 to 22 than no credit will be available to you.

 

Please make sure that the you are providing these services at restaurant only then abatement of 60 can be taken, if these services or a part thereof are provided as a outdoor catering than abatement equal to 40% of value of service will be available

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