Input Credit on Canteen

This query is : Resolved

Ajith Kumar (Querist)
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03 October 2008 Company entered in to a contract with a caterer for supply of food in the factory.

All kichen equipment, Gas, electricity and labour for cleaning are provided by the company.

Company recovers food cost from the employees throgh salary deduction.

Canteen contractor gives bill, charging service tax on entire bill, to the company at the month end which is paid by the company.

whether we can take the service tax credit so charged by the canteen contractor?

If the company provides canteen at free of cost to its employees, then r v eligible for credit.

PIYUSH JAIN

PIYUSH JAIN (Expert)
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03 October 2008 Under Cenavat credit rules 2004, Input credit can be taken only if it used for providing output service or used in manufacturing of final product.
Situation is not such in your case.So you can not take credit of that.
For Staff welfare ( co exp )only you can take credit as per various case laws.But it is disputed issue.

Shyam Lal Naik

Shyam Lal Naik (Expert)
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10 October 2008 The definition of input service is wide enough. You will be eligible only if you provide canteen facility free of cost to your employees.

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Shyam Lal Naik

Shyam Lal Naik (Expert)
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11 October 2008 It has been held that credit will be available, even if subsidised food are provided. The following case may be referred to : CESTAT, WZB, MUMBAI

CCE
v.

GTC Industries Ltd.

APPEAL NO. E/1279/07-
Mum & E/CO-239/07-Mum