Restaurant Service & CENVAT credit - a dissertation

Please refer to explanation to Rule 3 of CENVAT Credit Rules, 2004.
Which states that " Where the provisions of any other rule or notification provide for grant of whole or part exemption on condition of non-availability of credit of duty paid on any input or capital goods, or of service tax paid on input service, the provision of such other rule or notification shall prevail over the provisions of these Rules."

Hence, in case of restaurant service provisions of Rule 2C of Service Tax (Determination of Value)Rules, 2006 prevails over CENVAT CREDIT RULES, 2004.

As per second explanation to rule 2C of Service Tax (Determination of Value)Rules, 2006 it restricts only CENVAT credit of duties or cess paid on any goods classified under Chapters 1 to 22 of the Central Excise Tariff Act, 1985(5 of 1986).

Therefore, CENVAT credit of inputs except chapter 1-22, Capital Goods and Input services are available in case of Restaurants.

Bishan Shah 14/07/2015