CENVAT Credit on Telephone Connections

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Aman Baranwal (Querist)
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01 April 2009 Can A Manufacturer of Yarn (Cotton/Fiber) take CENVAT Credit on Service Tax Paid on Mobile/ Landline bills?

My another question is that-

1) if Company is paying the mobile bills of employees (Connection are in the name of Employees)

2) If Company is paying the mobile bills of employees (Connection are in the name of Company)
-Then what are the provisions?

Please Reply...

CA.Hanumantha Reddy

CA.Hanumantha Reddy (Expert)
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01 April 2009 Yes, you can take if the connections are in the name of company. Further, request you to take proportionately since sometimes employees may use their personal purpose which is not eligible for CENVAT credit (read input services definition under CENVAT credit Rules, 2004).

If connections are not in the name of company you can not take CENVAT credit.

CA Devanshi Gandhi (Ajani)

CA Devanshi Gandhi (Ajani) (Expert)
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01 April 2009 i agree with the expert

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Dayal

Dayal (Expert)
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01 April 2009 It is obvious that employees would be using for personal use, but so long in the name of the company, credit is not deniable which is eqully clarified by the master circular on service tax issued by the department.

IN THE CEST A T, SOUTH ZONAL BENCH, CHENNAI

Shri P.G. Chacko, Member (J)

COMMISSIONER OF C. EX. (L TV), CHENNAI

Versus

BRAKES INDIA LTD.

Final Order No. 1128/2008 and stay Order No. 897/2008, dated 3-10-2008 in Application No. E/SO/261/2008 in Appeal No. E/306/2008

Shri N.J. Kumaresh, SDR, for the Appellant.

Shri M. Kannan, Advocate, for the Respondent.

In the said citation it is stated that the telephone service received on the mobile phones of the respondents, which were operated by their staff in connection with the business of the company, was 'input service' and accordingly the service tax paid thereon was available as CENVAT credit to the respondents.

Therefore you can take the entire credit where the connections are in the name of the company

Regarding personal connections, though reimbursed by the company will not stand to be eligible