Restaurant service valuation under Rule 2C does not trigger further CENVAT credit reversal under Rule 6.

Where restaurant service is taxed on 40% of the total amount under Rule 2C of the Service Tax (Determination of Value) Rules, 2006, the remaining 60% is not treated as exempt turnover or exempt service for Rule 6 of the CENVAT Credit Rules, 2004. The stated legal position is that a restaurant service provider paying service tax on the service portion under Rule 2C is not required to make any further reversal of CENVAT credit under Rule 6. The Board's circular and the cited Tribunal view both support this construction, with the consequence that no further credit reversal is payable.

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Issues: Whether a restaurant service provider paying service tax on the service portion under Rule 2C of the Service Tax (Determination of Value) Rules, 2006 is required to make further reversal of CENVAT credit under Rule 6 of the CENVAT Credit Rules, 2004.

Analysis: The valuation scheme under Rule 2C fixes the taxable value of the service portion in restaurant supplies at 40% of the total amount charged. The remaining 60% cannot, by itself, be treated as an abatement or as exempted goods or exempted service for the purpose of Rule 6. The Board's clarification in Circular No. 213/3/2019-Service Tax stated that no further reversal of credit is required for a restaurant service provider paying tax under Rule 2C. The same view was supported by the cited Tribunal decision, which held that the balance value is not exempt turnover and that Rule 6 does not apply.

Conclusion: No further reversal of CENVAT credit under Rule 6 of the CENVAT Credit Rules, 2004 was payable, and the demand, interest, and penalty were unsustainable.

Ratio Decidendi: Where the statute itself prescribes a percentage of the total value as the taxable value of restaurant service, the balance portion is not automatically exempted turnover, and Rule 6 of the CENVAT Credit Rules, 2004 does not apply.

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