SSI Exemption Limit Should Be Calculated Excluding 60% Abatement on Restaurant Services: CESTAT [Read Order]
CESTAT held that 60% abatement on restaurant services must be excluded when calculating the SSI exemption limit.
Restaurant - service - Taxscan
Restaurant - service - Taxscan
The Chandigarh Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that while calculating the SSI exemption limit for restaurant services, 60% of the value eligible for abatement should be excluded from the computation.
Brothers Dhaba, the appellant, is registered with the service tax department under “Restaurant Services.” On scrutiny of its service tax returns for the year 2014-15, the department found that the appellant had availed SSI exemption on turnover of Rs. 24,75,391, exceeding the prescribed limit of Rs. 10 lakh.
A show cause notice dated 12.04.2017 was issued proposing demand of Rs. 72,944 in service tax, along with interest and penalties. The adjudicating authority confirmed the demand under Section 73(1) of the Finance Act, 1994, ordered recovery with interest under Section 75 and imposed a penalty of Rs. 7,294 under Section 76. The Commissioner (Appeals) upheld the order.
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The appellant’s counsel argued that the authorities wrongly computed the SSI exemption by including the entire gross amount of Rs. 24,75,391 without applying the 60% abatement available to restaurant services.
The counsel submitted that only the remaining 40% value is taxable, and after applying abatement, the turnover falls within the Rs. 10 lakh SSI exemption limit. The tribunal relied on Shri Ashok Kumar Mishra v. CCE & ST, Allahabad, where in an identical matter it was held that the abated portion of the value, being exempt from service tax, should not be considered for SSI threshold calculation.
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The revenue counsel supported the findings of the Commissioner (Appeals) and argued that the appellant had crossed the exemption limit and was liable to pay the service tax demanded.
The single-member bench comprising S. S. Garg (Judicial Member)explained that restaurant services enjoy 60% abatement under the notification, and only the remaining 40% is subject to tax. When the turnover is calculated on this abated value, the appellant falls within the SSI exemption limit.
The tribunal pointed out that the issue was already covered by the decision in Shri Ashok Kumar Mishra, which clarified that the exempted portion should not be included in the computation of aggregate value for SSI exemption. Following the earlier decision, the tribunal set aside the impugned order and allowed the appeal with consequential relief as per law.
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