Page 129 - GSTL_11th June 2020_Vol 37_Part 2

2020 ] GATEWAY HOTELS v. COMMISSIONER OF CUSTOMS, C. EX. & S.T., COCHIN 215
Demand for the period from 1-7-2012 to 31-3-2013
During this period, the exempted services has been defined under Rule
2(e) of the CCR as below :-
Rule 2(e) “exempted services” means a
(1) taxable service which is exempt from the whole of the service
tax leviable thereon; or
(2) service on which no service tax is leviable under Section 66 of
the Finance Act; or
(3) taxable service whose part of value is exempted on the condi-
tion that no credit of inputs and input services used for
providing such taxable services, shall be taken;’ but shall not
include a service which is exported in terms of Rule 6A of the
Service Tax Rules, 1994.
Learned Counsel submitted that in the present case the appellants have availed
the benefit of abatement with respect of accommodation service as per Sl. No. 6
of the Notification No. 26/2012, dated 20-6-2012. As per the said entry, 40% of
the value of accommodation service has been exempted from the levy of service
tax on the condition that the Cenvat credit on inputs and capital goods used for
providing the taxable service has not been taken under the provisions of CCR.
He further argued that there is no restriction with respect to availment of Cenvat
credit on input services. The only restriction is with respect to availment of Cen-
vat credit on inputs and capital goods. Therefore the appellants are availing the
benefit of abatement with respect to accommodation service and the same cannot
be considered as exempted service. In respect of restaurant service, the appel-
lants are not availing any abatement Notification. As per Rule 2C of the Service
Tax (Determination of Value) Rules, 2006, value of service portion involved in
supply of food or any other article of human consumption or any drink in a res-
taurant has been fixed as 40% of the total value on the condition that Cenvat
credit on inputs classified under Chapters 1 to 22 of the CETA, 1985. He further
submitted that when the statute itself prescribes a certain percentage on the total
value as the value of services, the remaining portion of the value would neither
be considered as an abatement nor as an exemption. Accordingly, restaurant ser-
vice also would not be covered under the definition of exempted service and
hence, the provisions of Rule 6 is not applicable. The Learned Counsel also sub-
mitted that this Tribunal vide its Final Order No. 21118/2018, dated 8-8-2018 on
identical issue relating to the period from 1-4-2013 to 31-3-2014 has held that the
restaurant service and accommodation service on which abatement is claimed by
the appellant are not exempted services as defined under Rule 2(e) of CCR.
4.3 Learned Counsel further submitted that as per the impugned order,
the Commissioner has disallowed the Cenvat credit amounting to Rs. 80,57,265/-
for the period April, 2008 to March, 2013 whereas in fact the appellant had
availed the total credit of approximately Rs. 10 lakhs for the period from April,
2008 to March, 2012 and Rs. 13,05,882/- for the period from April, 2012 to March,
2013. He also submitted that even if for the sake of argument, the impugned ser-
vices rendered by the appellant is treated as exempted services, the reversal of
credit should be on proportionate basis as provided under Rule 6(3A) of the
CCR,. He further submitted that the Commissioner has denied this benefit on the
ground that the appellant has not intimated the Department in writing regarding
the option exercised under Rule 6 of the CCR. Learned Counsel submitted that

GST LAW TIMES  11th June 2020  129