Is AC applies to all the 3 types of Restaurant Services & about Cenvat

[Renuka Devi]

Is AC applies to the 3 types of Restaurant Services. (i) Indoor (ii) Outdoor Catering (iii) Bundled Service ? If yes, for case (ii) & (iii) which place should have AC being fitted, the restaurant Or the place of delivery of the food/beverages items?

Can all the taxes paid as service tax, excise duty, sales tax, vat by the restaurant on transporter/raw food/machines/water/table/carpet/electric/repairs can be credited as Cenvat and utilise for payment of service tax?

[KASTURI SETHI]

The condition of AC applies to indoor service only whether in a restaurant, eating joint or a mess or hotel, convention center, club, etc. whether covered under Bundled Services or under the category of ' Service portion in Supply of Food or Other Article of Human Consumption or any drink under Section 66 E(i) which is declared service. Exemption to this service if provided in rooms other than the facility of air conditioning or central heating has been granted vide Notification No.25/12-ST dated 20.6.12 as amended vide notification no.3/2013-ST dated 1.3.2013. which reads as under :-

“19. Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year;”

It does not imply that exemption to outdoor catering, Mandap Keeper or Bundled Services. Practically also there is no purpose of A.C. in the open or outside the room. Hence condition of A.C. applies to indoor service only, may be in any part of the establishment.

Regarding Cenvat credit of Central Excise duty , if you avail abatement, credit is not allowed as per Serial No.4 of Notification No.25/12-ST dated 20.6.12.

Regarding credit of Service Tax on transportation, AMC etc., credit can be taken if these are qualified as input service in terms of Rule 2(l) of Cenvat Credit Rules, 2004.

AI Summary

Air conditioning requirement limited to indoor restaurant services; outdoor catering excluded and credit rules govern Cenvat claims. Air conditioning is a qualifying condition only for indoor restaurant services, including bundled or service portion supplies, and does not apply to outdoor catering or open air arrangements; exemption exists where premises lack air conditioning. Central excise duty cannot be taken as Cenvat credit if abatement is availed; service tax on transportation and AMC can be credited only if those services qualify as input services under the Cenvat Credit Rules.