Service tax input credit (renting of passenger motor vehicle
This query is : Resolved
Guest
Guest
(Querist)
16 July 2013
Dear expert,
My company (Service sector Industry) sometimes hire car for its employees for conveyance.
can we take input credit of service tax on on the ST liability (40%) that we create to government.
My company (Service sector Industry) sometimes hire car for its employees for conveyance.
can we take input credit of service tax on on the ST liability (40%) that we create to government.
16 July 2013
No it is ineligible.
1)From 01-07-2012, specified services are taxable to company on reverse charge basis and one of them is rent-a-cab service.
2)Generally, once paid, the amount of service tax paid on reverse charge basis is available as CENVAT Credit on the basis of GAR-7 challan paid.
3)However, CENVAT credit of service tax paid on rent-a-cab service is specifically excluded in “input service” definition {Rule 2(I)} and thereby made it ineligible for credit.
Thanks & regards
Ganesh babu k
1)From 01-07-2012, specified services are taxable to company on reverse charge basis and one of them is rent-a-cab service.
2)Generally, once paid, the amount of service tax paid on reverse charge basis is available as CENVAT Credit on the basis of GAR-7 challan paid.
3)However, CENVAT credit of service tax paid on rent-a-cab service is specifically excluded in “input service” definition {Rule 2(I)} and thereby made it ineligible for credit.
Thanks & regards
Ganesh babu k
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16 July 2013
in your case as per rule 2 of cenvat credit rule is not allowed for availing credit.
16 July 2013
I have doubt that whether service tax as a service receiver applicable to you..
As you have not provided how you are getting bills for this..means you are telling it is reimbursement in my opinion service tax not applicable..however it may also applicable
please refer below provisions...
1)Though company is reimbursing the Bill, the service receiver is the employee, if the Bill of the service provider is in name of employee
2)[In fact, the motor vehicle operator is not likely to know that the service receiver is company and will have to charge service tax in normal course, if he is otherwise liable].
3)In such cases, the company will not be liable under reverse charge.
4)However, if the bill is in name of the company, reverse charge will apply, if the service provider is individual, HUF etc.
Thanks & regards
Ganesh babu k
As you have not provided how you are getting bills for this..means you are telling it is reimbursement in my opinion service tax not applicable..however it may also applicable
please refer below provisions...
1)Though company is reimbursing the Bill, the service receiver is the employee, if the Bill of the service provider is in name of employee
2)[In fact, the motor vehicle operator is not likely to know that the service receiver is company and will have to charge service tax in normal course, if he is otherwise liable].
3)In such cases, the company will not be liable under reverse charge.
4)However, if the bill is in name of the company, reverse charge will apply, if the service provider is individual, HUF etc.
Thanks & regards
Ganesh babu k
Guest
Guest
(Querist)
19 July 2013
The bills are raised on the name of the company, company create st 40% liability to Govt. under reverse charge machanism
Thanks experts
Thanks experts
19 September 2013
I hope this case is useful on this subject
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ST : A manufacturer is eligible for input service credit of : (1) construction services for maintenance and repair of factory premises, (2) travel and car services used by staff for official visits and (3) catering services for supply of food to staff where entire cost of catering was borne by assessee
■■■
[2013] 37 taxmann.com 25 (Mumbai - CESTAT)
CESTAT, MUMBAI BENCH
Zydus Nycomed Healthcare (P.) Ltd.
v.
Commissioner of Central Excise, Belapur*
P.R. CHANDRASEKHARAN, TECHNICAL MEMBER
FINAL ORDER NO. A/303/2012 -WZB/C-IV (SMB)
APPEAL NO. E/1520 OF 2012
NOVEMBER 12, 2012
Rule 2(l), read with rule 5, of the Cenvat Credit Rules, 2004 - CENVAT Credit - Input service - General - Period January 2009 and February 2009 - Assessee, a 100 per cent EOU, availed credit of : (1) construction services for maintenance and repair activities undertaken for factory premises, (2) travel and car services used by staff for official visits and (3) catering services for supply of food to staff where entire cost of catering was borne by assessee - Department denied credit on ground that said services were not input services eligible for credit - HELD : Definition of input service covers all services having nexus with business of manufacturing activity - Construction services towards repairs and maintenance of factory premises are eligible as input services, especially when invoices indicated that same were towards repair and maintenance of factory premises - In view of judgment in CCE v. Stanzen Toyotetsu India (P.) Ltd. [2011] 32 STT 244/12 taxmann.com 101 (Kar.), travel car services were eligible as input service - In view of judgment in CCE v. Ultra Tech Cement Ltd. [2010] 29 STT 244 (Bom.) since assessee was not recovering cost of catering from employees, catering services were eligible for input service credit - Hence, assessee was entitled to credit [Para 6] [In favour of assessee]
CASE REVIEW
CCE v. Ultratech Cement Ltd. [2010] 29 STT 244 (Bom.) and CCE v. Stanzen Toyotetsu India (P.) Ltd. 2011 32 STT 244/12 taxmann.com 101 (Kar.)(para 6) followed
CASES REFERRED TO
CCE v. Ultratech Cement Ltd. [2010] 29 STT 244 (Bom.) (para 6) and CCE v. Stanzen Toyotetsu India (P.) Ltd. [2011] 32 STT 244/12 taxmann.com 101 (Kar.) (para 6).
Rakesh D. Kadam for the Appellant. A.K. Prabhakar for the Respondent.
ORDER
1. The appeal is directed against order-in-appeal No. BC/159/BEL/2012-13, dated 29-6-2012 passed by the Commissioner of Central Excise (Appeals), Navi Mumbai.
2. The appellant, M/s. Zydus Nycomed, Healthcare Pvt. Ltd., filed two refund claims for refund of Rs. 4,17,979/- for the period January 2009 and for an amount of Rs. 4,90,378/- for the period February 2009, in terms of Rule 5 of the Cenvat Credit Rules, 2004, towards refund of unutilized Cenvat credit of service tax inasmuch as they were a 100% EOU and they were not making DTA clearances. The same was considered by the lower Adjudicating authority and an amount of Rs. 1,58,114/- was rejected pertaining to Service Tax credit availed on construction services, travel and car services, catering services and clearing and forwarding agency services on the ground that these services are not "input services" and have no nexus with the manufacturing activity undertaken by the appellant. Hence, the appellant preferred an appeal before the lower Appellate authority, who vide the impugned order allowed the Service Tax credit on clearing and forwarding agency services and rejected the refund claim pertaining to construction services, travel and car services and catering services. Hence the appellant is before me.
3. Shri Rakesh D. Kadam, Manager, appeared for the appellant and made the following submissions. The construction services undertaken by them is in fact relating to maintenance and repair activities undertaken for the factory premises where the manufacturing activities take place and hence they are rightly entitled for the credit of Service Tax paid thereon and consequently to the refund. Similarly, in the case of travel and car services, these have been used by the staff of appellant for official visits and therefore, that is also an eligible input service. As regards the catering service, the company had engaged an outdoor caterer for supply of food to the staff and the entire cost of catering is borne by the company and therefore, in respect of this service also, they are eligible for the input credit. He also submits that there are a number of Tribunal decisions upholding the eligibility of credit in respect of these services as "input service" and accordingly, he prays for allowing the appeal.
4. The ld. AR appearing for the Revenue reiterates the findings of the lower authorities.
5. I have carefully considered the rival submissions.
5.1 Rule 2(1) of the Cenvat Credit Rules, 2004 define the inputs service as follows :
'"Input service" means any service, - (i) used by a provider of taxable service for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products up to the place of removal, and includes services used in relation to modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement of sales promotion, market research, storage up to the place of removal, procurement of inputs, accounting auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation up to the place of removal.'
6. From the reading of the above, it becomes absolutely clear that the definition of inputs service can covers all services, which have a nexus with the manufacturing activity undertaken by the appellant. The Hon'ble High Court in the case of CCE v. Ultratech Cement Ltd. [2010] 29 STT 244 (Bom.)has held that any service which has a nexus with the business of the manufacturing activity undertaken by the appellant would be an eligible input service and in respect of outdoor catering service, the Hon'ble High Court held that the same is an eligible input service subject to the condition that the manufacturer does not recover any cost from their employees. In the instant case, as submitted by the appellant, they are not recovering any cost towards catering from their employees and therefore, they are rightly entitled for the same as input credit. Similarly, in the case of travels and tours the Hon'ble High Court of Karnataka in the case of CCE v. Stanzen Toyotetsu India (P.) Ltd. [2011] 32 STT 244/12 taxmann.com 101 have held that travel car services are eligible input service and therefore, in this case also the appellant is rightly entitled for the credit. As regards the construction service, in the instant case, it is towards repairs and maintenance of the factory premises and the invoices submitted by the appellant available in the records, also indicate that the same is towards repair and maintenance of the factory premises and therefore, these are also eligible input services. In view of the above, the finding of the lower Appellate authority that these are not input services has no merits.
7. Accordingly, the appeal is allowed with consequential relief, if any.
---------------------------------------
ST : A manufacturer is eligible for input service credit of : (1) construction services for maintenance and repair of factory premises, (2) travel and car services used by staff for official visits and (3) catering services for supply of food to staff where entire cost of catering was borne by assessee
■■■
[2013] 37 taxmann.com 25 (Mumbai - CESTAT)
CESTAT, MUMBAI BENCH
Zydus Nycomed Healthcare (P.) Ltd.
v.
Commissioner of Central Excise, Belapur*
P.R. CHANDRASEKHARAN, TECHNICAL MEMBER
FINAL ORDER NO. A/303/2012 -WZB/C-IV (SMB)
APPEAL NO. E/1520 OF 2012
NOVEMBER 12, 2012
Rule 2(l), read with rule 5, of the Cenvat Credit Rules, 2004 - CENVAT Credit - Input service - General - Period January 2009 and February 2009 - Assessee, a 100 per cent EOU, availed credit of : (1) construction services for maintenance and repair activities undertaken for factory premises, (2) travel and car services used by staff for official visits and (3) catering services for supply of food to staff where entire cost of catering was borne by assessee - Department denied credit on ground that said services were not input services eligible for credit - HELD : Definition of input service covers all services having nexus with business of manufacturing activity - Construction services towards repairs and maintenance of factory premises are eligible as input services, especially when invoices indicated that same were towards repair and maintenance of factory premises - In view of judgment in CCE v. Stanzen Toyotetsu India (P.) Ltd. [2011] 32 STT 244/12 taxmann.com 101 (Kar.), travel car services were eligible as input service - In view of judgment in CCE v. Ultra Tech Cement Ltd. [2010] 29 STT 244 (Bom.) since assessee was not recovering cost of catering from employees, catering services were eligible for input service credit - Hence, assessee was entitled to credit [Para 6] [In favour of assessee]
CASE REVIEW
CCE v. Ultratech Cement Ltd. [2010] 29 STT 244 (Bom.) and CCE v. Stanzen Toyotetsu India (P.) Ltd. 2011 32 STT 244/12 taxmann.com 101 (Kar.)(para 6) followed
CASES REFERRED TO
CCE v. Ultratech Cement Ltd. [2010] 29 STT 244 (Bom.) (para 6) and CCE v. Stanzen Toyotetsu India (P.) Ltd. [2011] 32 STT 244/12 taxmann.com 101 (Kar.) (para 6).
Rakesh D. Kadam for the Appellant. A.K. Prabhakar for the Respondent.
ORDER
1. The appeal is directed against order-in-appeal No. BC/159/BEL/2012-13, dated 29-6-2012 passed by the Commissioner of Central Excise (Appeals), Navi Mumbai.
2. The appellant, M/s. Zydus Nycomed, Healthcare Pvt. Ltd., filed two refund claims for refund of Rs. 4,17,979/- for the period January 2009 and for an amount of Rs. 4,90,378/- for the period February 2009, in terms of Rule 5 of the Cenvat Credit Rules, 2004, towards refund of unutilized Cenvat credit of service tax inasmuch as they were a 100% EOU and they were not making DTA clearances. The same was considered by the lower Adjudicating authority and an amount of Rs. 1,58,114/- was rejected pertaining to Service Tax credit availed on construction services, travel and car services, catering services and clearing and forwarding agency services on the ground that these services are not "input services" and have no nexus with the manufacturing activity undertaken by the appellant. Hence, the appellant preferred an appeal before the lower Appellate authority, who vide the impugned order allowed the Service Tax credit on clearing and forwarding agency services and rejected the refund claim pertaining to construction services, travel and car services and catering services. Hence the appellant is before me.
3. Shri Rakesh D. Kadam, Manager, appeared for the appellant and made the following submissions. The construction services undertaken by them is in fact relating to maintenance and repair activities undertaken for the factory premises where the manufacturing activities take place and hence they are rightly entitled for the credit of Service Tax paid thereon and consequently to the refund. Similarly, in the case of travel and car services, these have been used by the staff of appellant for official visits and therefore, that is also an eligible input service. As regards the catering service, the company had engaged an outdoor caterer for supply of food to the staff and the entire cost of catering is borne by the company and therefore, in respect of this service also, they are eligible for the input credit. He also submits that there are a number of Tribunal decisions upholding the eligibility of credit in respect of these services as "input service" and accordingly, he prays for allowing the appeal.
4. The ld. AR appearing for the Revenue reiterates the findings of the lower authorities.
5. I have carefully considered the rival submissions.
5.1 Rule 2(1) of the Cenvat Credit Rules, 2004 define the inputs service as follows :
'"Input service" means any service, - (i) used by a provider of taxable service for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products up to the place of removal, and includes services used in relation to modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement of sales promotion, market research, storage up to the place of removal, procurement of inputs, accounting auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation up to the place of removal.'
6. From the reading of the above, it becomes absolutely clear that the definition of inputs service can covers all services, which have a nexus with the manufacturing activity undertaken by the appellant. The Hon'ble High Court in the case of CCE v. Ultratech Cement Ltd. [2010] 29 STT 244 (Bom.)has held that any service which has a nexus with the business of the manufacturing activity undertaken by the appellant would be an eligible input service and in respect of outdoor catering service, the Hon'ble High Court held that the same is an eligible input service subject to the condition that the manufacturer does not recover any cost from their employees. In the instant case, as submitted by the appellant, they are not recovering any cost towards catering from their employees and therefore, they are rightly entitled for the same as input credit. Similarly, in the case of travels and tours the Hon'ble High Court of Karnataka in the case of CCE v. Stanzen Toyotetsu India (P.) Ltd. [2011] 32 STT 244/12 taxmann.com 101 have held that travel car services are eligible input service and therefore, in this case also the appellant is rightly entitled for the credit. As regards the construction service, in the instant case, it is towards repairs and maintenance of the factory premises and the invoices submitted by the appellant available in the records, also indicate that the same is towards repair and maintenance of the factory premises and therefore, these are also eligible input services. In view of the above, the finding of the lower Appellate authority that these are not input services has no merits.
7. Accordingly, the appeal is allowed with consequential relief, if any.
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