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Q. > Please Help: Cenvat credit
In light of the recent amendment in the definition of the term 'input services' under Cenvat Credit Rules, 2004 whether a service provider engaged in providing consultancy service will be eligible to availe cenvat credit of Service tax paid on telephnoe bill and on rent paid for its premises as the said amendment has narrowed the scope of the said term by removing the phrase " in relation to business such as". Please provide legal provision in this regard.
answered Sep 12, 2011 by Ashish Karundia , New Delhi
Dear Chetan,
Here, you can claim cenvat credit of service tax paid on rent and telephone expenses in the main clause itself (i.e. 2 (l)(i)) itself, as the same is commercially required. However, credit of service tax paid relating to personal expenditure for telephone will not be available. Further, you can refer the judgement of J.K. COTTON SPG. & WVG. MILLS CO. LTD (SC) 1997 91 ELT 34 in this regard.
Experts Panelist
Comments
CA VIPIN GARG
12-Sep-2011 , 09:11:11 amDear Chetan, As far as Rent is concerned yes you can very well take the benefit of service tax credit input but as far as telephone is concerned you have to be somehow careful. As per the amendments you can take the service tax input on telephone services related to your business only, i mean if you have provided the telephone facility to your employees and reimbursing or paying the bills related to your employees mobiles then you can't take the benefit of the same because as per amendments, you can't take the service tax benefit related to the facilities or reimbursement provided by the employer to the employee which can benefit them personally............ Hope that will somehow solve your query...