Cenvat

This query is : Resolved

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20 March 2013 A company is paying telephone, lodging bills of its employees.whether CENVAT credit can be claimed by that company for the service tax charged on that bill?

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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21 March 2013 no, credit cant be taken on lodging, when such services are used primarily for personal use or consumption of any employee.

but credit on telephone bill can be taken as its specifically included.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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22 July 2013 GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE (APPEALS), MANGALORE,
V FLOOR, TRADE CENTRE, BUNTS HOSTEL ROAD, MANGALORE – 575 003
TELEPHONE No: 0824- 2447623 FAX: 0824- 2448443
E MAIL ID: appeals_mangalore@yahoo.com
A.No.483/2009(MY)(ST) Passed on: 11-05-2010
A.No.484/2009(MY)( ST)(D) Issued on: 11-05-2010
ORDER – IN - APPEAL NO. 165/2010
Following are the two appeals filed by the following appellants against
the Order-In-Original No. 69/2009 dated 04-09-09 passed by the Assistant
Commissioner of Central Excise, Service Tax & EOU Division, Mysore.
Sl.
No.
Appeal.No. Appellants name Amount demanded
01 483/09(MY)(ST) M/s. Skill Tech
Engineers&
Contractor Pvt. Ltd.,
Mysore
Service Tax of Rs.83513/-
And disallowance of credit
of Rs. 3381/-
02 484/09(MY)(ST)
(D)
Commissioner of
Central Excise,
Mysore
Service Tax of Rs.83513/-
And disallowance of credit
of Rs. 3381/-
BREIF FACTS OF THE CASE
The appellant @ SI No. 1 are registered under the category of Erection,
Commissioning, or Installation service, works contract service, transport of
goods by road service. They were paying the service tax. The internal audit
party noticed some irregularities on part of the appellants and a SCN was 2
issued and the adjudicating authority vide impugned order decided the
following issues:
1. Whether the excess amount of Rs.83513/- paid from 09/2006 to
03/2007 can be adjusted towards the service tax liability for July’07.
2. Whether there is delay in payment of service tax during the period
Sep’07 to May’08.
3. Whether the appellant is liable to pay service tax on freight charges
received on account of goods supply to their customers under Erection
& Commissioning Services.
4. Whether late fee for delay filing of ST- 3 can be imposed.
5. Whether Cenvat credit availed on residential telephone of company
director is in order.
After examining the issues the adjudicating authoirity vide impugned
order confirmed the demand of short paid service tax of Rs.83513/- with
interest and disallowed cenvat credit of Rs.3381/- on telephone services.
Aggrieved by this appellant @ SI No. 1 had preferred this appeal on the
following grounds:
1. The demand pertaining to period July’07 is barred by the limitation and
extended period cannot be invoked. Excess payment of service tax paid
during the earlier period can be adjusted for the subsequent period
liability in terms of Rule 6(3) itself provides such an adjustment.
Further Rule 6(4a) also supports their view and department also
clarified the same in frequently asked questions. Hence such
adjustment is allowed and the order should be set aside.
2. Service tax credit on telephone bills are allowed as per case of ITC Ltd.
Vs. CC & CE, Salem (2009(14) STR 847 (Tri- Chennai). They requested
to set aside the order.
The department (appellant @ SI No. 2) also filed appeal on the above
order on the following grounds.
1. The appellant had made payment of service tax through irregular
adjustment of excess paid service tax and also irregularly availed cenvat
credit on telephone services. Hence penalty under Section 78 is 3
warranted in this case and the impugned order which has not imposed
any penalty is bad in law.
2. The late fee of Rs.2000/-should be imposed in terms of Rule 7C
because late fee is leviable in respect of all returns filed after the due
date with effect from 12-05-07. In this case the return is pertaining to
the period from 09/06 to 03/07 and the provisions of Rule 7C is
applicable as in this case the return is filed after 12-05-07.
As requested a personal hearing was held on 19-03-10. S. K.
Venugopal Rao, CA appeared on behalf of the appellant and submitted the
written brief.
FINDINGS
I have carefully gone through the facts of the case and submissions
made in respect of both appeals and as the both appeals are related to the
same impugned order both are taken up together for decision.
First of all I would like to decide the appeal filed by the appellant @ SI
no. 1. The appellant strongly argues that excess payment of service tax paid
during the earlier period can be adjusted for the subsequent period. From the
records I find that the appellant had adjusted Rs.83513/- which was excess
payment of service tax for the period from 09/06 to 03/07, towards the
service tax liability for July’07. This issue is already decided by me vide OIA
No. 290/09 dated 21-07-09 passed in respect of M/s. BSNL, Chikmagalor, the
operative portion of the same is reproduced below:
. “In this regard I rely upon the case law of M/s. Nirma Architects and Valuers
V/s CCE, Gaziabad as reported in 2006(1)STR 305(Tri. Del.) wherein it was
held in para 5 that the adjustment of short payment of service tax by the
appellant by the excess payment made by him was allowable and stated that
the provisions are available for such adjustment of excess paid amount to the
short payment. Para 5 of the above decision is reproduced below; 4
5. Considered the submissions made by both sides and perused the
records. I find that the appellants have paid an excess amount of Rs.
729/- for the period October, 1998 to March 1999, which is not disputed
by the Revenue. Adjustment of the short payment of Rs. 382/- for the
period October to December, 1999 is the only request sought by the
appellants. I find that this is a fair request inasmuch as that Rule 6(3) of
the Service Tax Rules provides for such adjustment. In order to appreciate
the same, the said Rule is reproduced below :
Where an assessee has paid to the credit “(3) of Central Government
Service Tax in respect of taxable service which is not provided by him
either wholly or partially for any reason, the assessee may adjust the
excess service tax so paid by (calculated on a pro rata basis) against his
service tax liability for the subsequent period, if the assessee has
refunded the value of taxable service and the service tax thereon to the
person from whom it was received.”
It can be seen from the above that the law makers have specifically
provided for the adjustment of excess paid to the short payment.
Resorting to a narrow interpretation that such adjustment is possible only
if there is a return of Service Tax to the client and relegate the assessee to
the rigmoral of refund procedure, would defeat the salutary intention of
the law makers. The provisions of Rule 6(3) are for alleviating the
difficulties of the assessee than to create hurdle in smooth functioning of
imposition and collection of tax. In my opinion, a narrow interpretation as
propounded by DR would make the provisions otiose and nonimplementable. I find that, in the interest of justice, the adjustment of
short payment of service tax of October to December, 1999 by the
appellants to the excess payment of October, 1999 to March, 1999 is well
within the law and has to be allowed.
6. Therefore one cannot say that the appellant had not discharged the tax
liability. The demand of service tax along with interest is set aside. This
is because the amount has already been paid by making adjustment and
there is no short payment of tax. Penalty is also set aside.”
The issue with regard to availment of Cenvat credit of Service tax on
Telephone bills installed at the residence of the Directors is already settled
and in this regard the operative portion of the OIA No. 226/2008 dated 04-11-
08 passed by me connected to the same issue is reproduced below.

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