Itc of service tax

This query is : Resolved

Advocate Prashant Agarwal (Querist)
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11 June 2012 WE ARE TOURS AND TRAVEL AGENCY IN ALIGARH I.e.

CONVENIENCE TOURS AND FOREX PVT LTD ,
CONVENIENCE TRAVELS SERVICES ,
CONVENIENCE TOURS & TRAVELS
THOMAS COOK INDIA LTD
AT ALIG PLAZA, ALIGARH

WE PROVIDES;

TAXI BOOKING,
RAILWAY E-TKT,
HOTEL ROOM BOOKING,
TOUR PACKAGES
VISA ASSISTANCE ETC

FIRST SERVICE PROVIDER I.E.HOTELS , AIRLINES ETC CHARGED SERVICE TAX IN THEIR BILLS TO US ,
BESIDES AVOBE , WE ARE PAYING SERVICE TAX ON PAYMENT OF SUNDRY EXP LIKE, MOBILE BILLS, ADVERTISING PAYMENT TO AD AGENCY, PRINT MEDIA ETC

TO WHAT EXTENT WE CAN TAKE INPUT TAX CREDIT IN CALCULATING OUTPUT SERVICE TAX LIABILITY

I AM NOT TAKING ITC OF SERVICE TAX PAID ON MOBILE BILLS AS THE SAME WAS BANNED BY CBEC CIRCULAR NO. 59/8/2003 DT 20.06.2003 THAT NO ITC OF SERVICE TAX WILL BE ALLOWED ON MOBILE/PHONE BILLS PAID FOR CARRYING ON OR FOR SMOOTH FUNCTIONING OF BUSINESS.
AM I WRONG HERE IN YOUR OPINION CONSIDERING CBEC CIRCULAR 59/8/2003 DT 20.06.2003

PLEASE IF YOU HAVE MASTER COMMAND IN SERVICE TAX THAN ONLY YOU HAVE TO ADVISE OR PLAESE BE SILENT..
FROM
PRASHANT KUMAR AGARWAL
B.Com ,CA(Inter.)
+91 9760290825
prashant571.2008@gmail.com

Dayal

Dayal (Expert)
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12 June 2012 Dear PKA

The fundamental is that if you are taxable service provider and the services are availed for rendering or forming an integral part of rendering your taxable services, then yes, credit can be availed.

However exceptions are that any services consumed in relation to employee welfare, being canteen services / Health Insurance which are meant for consumption of the employees, then no cenvat credit is eligible.

The services availed should have direct nexus, like for instance mobile phone is an intergral part for communicating or giving information for inquiries or feedback of the services provided. Therefore there is no restriction on availing the cenvat credit. However you need to ensure that the invoice raised by the mobile service provider is in the name of the travel house and not in the name of individual.

If you are registered as tour operator, read the following

TOUR OPERATOR:

Sec.65(105)(n) defines the service ‘tour operator’.

For this service three types of abatements are there which are as follows:

Services provided or to be provided to any person, by a tour operator in relation to a package tour is required to pay service tax on 25% of the value of service provided. The ‘package tour’ is a tour wherein transportation, accommodation for stay, food, tourist guide, entry to monuments and other similar services in relation to tour are provided by the tour operator as part of the package tour to the person undertaking the tour. For this purpose the bill should indicate that it is inclusive of charges for such a tour;
Services provided or to be provided to any person, by a tour operator in relation to a tour, if the tour operator is providing services solely or arranging or booking accommodation for any person in relation to a tour is required to pay service tax on 10% of the value of service provided.
The conditions stipulated for this purpose are as follows:

The invoice, bill or challan issued should indicates that it is towards charges for such accommodation; and
This exemption shall not apply in such cases where the invoice, bill or challan issued by the tour operator, in relation to a tour, only includes the service charges for arranging or booking accommodation for any person and does not include the cost of such accommodation.
Services other than services specified above provided or to be provided to any person by a tour operator in relation to a tour is required to pay service tax on 40% of the value of service provided. The bill issued for this purpose should indicate that the amount charged in the bill is the gross amount charged for such a tour.

If abatement has been availed, there is no scope of availing cenvat credit for any of the clarification provided above.

The new provision from 01/07/2012

(ii) Services provided or to be provided to any person, by a tour operator in relation to a tour, if the tour operator is providing services solely of arranging or booking accommodation for any person in relation to a tour

Abatement 90% from taxable services provided
(i) CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.

(ii) The invoice, bill or challan issued indicates that it is towards the charges for such accommodation.

(iii) This exemption shall not apply in such cases where the invoice, bill or challan issued by the tour operator, in relation to a tour, only includes the service charges for arranging or booking accommodation for any person and does not include the cost of such accommodation.