Kindly guide guys. I have a client who is a partnership based hotel. It has been registered to service tax some time ago. It has a banquet hall, rooms as well as two restaurants. It is applying 8.65%, 7.42% and 4.94% rates of service tax on services provided respectively. No doubt all abated. The hotel is paying Almost 50000 as service tax per month on rent of premises of hotel. Can the hotel claim this as a cenvat credit ITC. If not, How can the hotel claim it?

It is urgent. An early guidance is highly appreciated



Posted 3 years ago by Kamaldeep Singh

Hi Kamaldeep,

The question you have raised on utilisation of Input service tax credit, moderately called Cenvat credit on immovable property used to run business of hotel, which is presently discharging its liability on abatement under relevant provisions of the Act is a question and answer by itself.

The transaction involving abatement itself signifies the cenvat credit non availibilty and in turn offers a service tax rate which is much lower then of 12%.

I hope this justifies your doubt.



S Kamath

Sundeep & Associates



Posted 2 years, 9 months ago by CA Sundeep Kamath

Hello Sudeep Sir. Thanks for the reply. Actually, I checked the relevant notifications regarding rooms, banquet and restuarant and they clearly lay down that itc of excise duty part of cost of food, things used to serve the food are not allowed. Rest cenvat is allowed. Therefore, Service tax on rent is allowed to the assessee.

Posted 2 years, 9 months ago by Kamaldeep Singh

Cenvat credit of Input services and Capital goods in case of Restuarant and banquet services and Cenvat credit of only Input services in case of rooms is available.

Posted 2 years, 9 months ago by Kamaldeep Singh

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