Input credit in Restaurant Service

[deepak gulati]

Dear Experts,

In Restraurant Service we are claiming Abatement of 60% as prescribed, the premises are on Rent and we are paying Service Tax on same.

Please clarify that we should claim full Input of Service Tax paid on Rent or we can claim 40% of same.

AI Summary

Input credit on rent may require proportionate reversal under cenvat rules when restaurant food sales are treated as exempt.
Input credit on service tax paid for rented premises in restaurant operations is contested between a restricted apportionment approach tied to abatement and a view permitting full Cenvat Credit except for inputs excluded by tariff classification. If the restaurant's food sales are treated as exempt supplies, proportionate reversal of credit under Rule 6 and related explanatory notifications applies. Specific service categories are also identified as ineligible or limited for credit.