Input credit of service tax on rent a cab
This query is : Open
30 May 2013
We are automobile Parts manufacturing listed company and we have hired a cab for full day basis which starts it service from picking up the employees from various location to Factory office and stays there full day for various needs and end up with dropping the employees to their house at evening. Cab service provider is a registered individual having service tax registration no. Do we avail the Input service tax which we pay under reverse charges mechanism. Kindly suggest.
30 May 2013
you can clim if cab are carrying technical employees only due to related to productio
other wise no claim
other wise no claim
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30 May 2013
Dear Mr. Rupesh,
That Cab ( Tavera ) carries Technical as well as Non Technical employees( working in Store department) of our company. Kindly Advice now?
Also we can claim input service tax credit with Excise payable.
That Cab ( Tavera ) carries Technical as well as Non Technical employees( working in Store department) of our company. Kindly Advice now?
Also we can claim input service tax credit with Excise payable.
17 June 2013
1)Transport for bringing employees to factory –
In CCE v. Cable Corporation of India (2009) 19 STT 158 = 33 VST 270 (CESTAT SMB),
it has been held that scope of definition of input service is much larger than being used directly or indirectly in relation to manufacture.
2)In this case, it was held that rent-a-cab service used to bring employees to work in factory has to be considered as being used indirectly in relation to manufacture or as part of business activity for promoting the business as any facility given to employees will result in greater efficiency and promotion of business
– same view in
CCE v. J K Cement Works (2009) 20 STT 254 (CESTAT SMB) *
CCE v. Hindustan Zinc (2009) 21 STT 285 (CESTAT SMB)
3)Bus service used for transporting employees to factory is input service
– CCE v. Haldyn Glass Gujarat (2009) 240 ELT 729 (CESTAT SMB)
* CCE v. HEG Ltd. (2010) 24 STT 9 (CESTAT SMB)
4)Rent-a-cab service – Rent-a-cab service is input service and eligible
– Hindustan Coca-Cola Beverages v. CCE (2009) 23 STT 460 (CESTAT SMB)
* Dr Reddy’s Lab v. CCE (2010) 24 STT 90 (CESTAT)
* Hindustan Coca-Cola Beverages v. CCE (2010) 24 STT 208 = 37 VST 351 (CESTAT)
* CCE v. Andhra Pradesh Paper Mills (2010) 254 ELT 354 (CESTAT SMB).
Thanks & regards
Ganesh babu k
In CCE v. Cable Corporation of India (2009) 19 STT 158 = 33 VST 270 (CESTAT SMB),
it has been held that scope of definition of input service is much larger than being used directly or indirectly in relation to manufacture.
2)In this case, it was held that rent-a-cab service used to bring employees to work in factory has to be considered as being used indirectly in relation to manufacture or as part of business activity for promoting the business as any facility given to employees will result in greater efficiency and promotion of business
– same view in
CCE v. J K Cement Works (2009) 20 STT 254 (CESTAT SMB) *
CCE v. Hindustan Zinc (2009) 21 STT 285 (CESTAT SMB)
3)Bus service used for transporting employees to factory is input service
– CCE v. Haldyn Glass Gujarat (2009) 240 ELT 729 (CESTAT SMB)
* CCE v. HEG Ltd. (2010) 24 STT 9 (CESTAT SMB)
4)Rent-a-cab service – Rent-a-cab service is input service and eligible
– Hindustan Coca-Cola Beverages v. CCE (2009) 23 STT 460 (CESTAT SMB)
* Dr Reddy’s Lab v. CCE (2010) 24 STT 90 (CESTAT)
* Hindustan Coca-Cola Beverages v. CCE (2010) 24 STT 208 = 37 VST 351 (CESTAT)
* CCE v. Andhra Pradesh Paper Mills (2010) 254 ELT 354 (CESTAT SMB).
Thanks & regards
Ganesh babu k
18 June 2013
Dear Mr.Ganesh babu, thanks alot for resolving my query
23 May 2014
No, as per the recent amendment in definition of input services by FInance act 2011, we cant claim cenvat on service tax paid for carrying employees.
Recent Judgement:*
The Hon’ble Karnataka High Court in the case of CCE Vs. Stanzen Toyotetsu India (P) Ltd.[(2011) 32 STT 244 (Kar.)] held that the transportation/Rent-a-Cab service is provided by the assessee to their employees in order to reach their factory premises in time which has a direct bearing on manufacturing activity. In fact, the employee is also entitled to conveyance allowance which would form part of his condition of service. Therefore, by no stretch of imagination it can be construed as a welfare measure by denying the availment of Cenvat credit to the assessee for providing transportation facilities as a basic necessity which has a direct bearing on the manufacturing activity. This decision was again followed by the same court in the case of CCE Vs. Tata Auto Comp Systems Ltd. CEA No. 132 of 2009.
REcent Changes by Fin Act 2011:-
But, w.e.f. 01-04-2011, the Central Government has amended the definition of ‘input service’ under Rule 2(l) of Cenvat Credit Rules, 2004 vide Notification No. 3/2011 – CE(NT) dated 01-03-2011and again vide Notification No. 18/2012 – CE(NT) dated 17-03-2012 (w.e.f. 01-04-2012).
The effect of the amendment is that rent-a-cab service has been specifically excluded from the definition of ‘input service’ and hence cenvat credit is generally not available.
Cenvat Credit is available only when rent a cab service could be related to a motor vehicle which is capital good for them. In other words, when a motor vehicle designed to carry passengers including their chassis, registered in the name of provider of service, when used for provided output service of- (i) transportation of passengers; or (ii) renting of such motor vehicle; or (iii) imparting motor driving skills, then cenvat credit can be availed.
Recent Judgement:*
The Hon’ble Karnataka High Court in the case of CCE Vs. Stanzen Toyotetsu India (P) Ltd.[(2011) 32 STT 244 (Kar.)] held that the transportation/Rent-a-Cab service is provided by the assessee to their employees in order to reach their factory premises in time which has a direct bearing on manufacturing activity. In fact, the employee is also entitled to conveyance allowance which would form part of his condition of service. Therefore, by no stretch of imagination it can be construed as a welfare measure by denying the availment of Cenvat credit to the assessee for providing transportation facilities as a basic necessity which has a direct bearing on the manufacturing activity. This decision was again followed by the same court in the case of CCE Vs. Tata Auto Comp Systems Ltd. CEA No. 132 of 2009.
REcent Changes by Fin Act 2011:-
But, w.e.f. 01-04-2011, the Central Government has amended the definition of ‘input service’ under Rule 2(l) of Cenvat Credit Rules, 2004 vide Notification No. 3/2011 – CE(NT) dated 01-03-2011and again vide Notification No. 18/2012 – CE(NT) dated 17-03-2012 (w.e.f. 01-04-2012).
The effect of the amendment is that rent-a-cab service has been specifically excluded from the definition of ‘input service’ and hence cenvat credit is generally not available.
Cenvat Credit is available only when rent a cab service could be related to a motor vehicle which is capital good for them. In other words, when a motor vehicle designed to carry passengers including their chassis, registered in the name of provider of service, when used for provided output service of- (i) transportation of passengers; or (ii) renting of such motor vehicle; or (iii) imparting motor driving skills, then cenvat credit can be availed.
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