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CENVAT credit of service tax paid on canteen facility at factory

23 November 2007

Dear friends,

Please let me know whether we can take CENVAT credit of service tax paid on the bill raised by caterers of Factory canteen.

Does such service fall under Input service

Thanks

Regards

Swati

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12 Replies

Dayal (Gen. Manager - Indirect Taxation) (3434 Points)
Replied 23 November 2007

Yes you can avail the cenvat credit of service tax paid. It squarely falls under the vide defination of input services. However credit to the extent of the amount recovered from the employees towards food supplied by canteen contractor will not be eligible.( employee contribution either through deduction or coupons provided by the company as deducted from salary) That means you need to take proportionate credit. Going ahead there is no provision for taking proportionate credit, but this is the best solution available. The above clarification is NOT provided as a legal opinion, but my views after a careful perusal of the provisions of the act /homepage/DM%20Associate/

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deepak (CWA STUDENT AND SERVICE) (200 Points)
Replied 23 November 2007

hi ,

i am working in a Call Center, a STPI unit we take the refund of input service tax under rule 5 of Cenvat Credit rule.
our company has a cafeteria and we paid service tax for services provided by cafeteria ( vendor charges the service tax on his bill) and then we claim the refund for service tax. but department has rejected the our cafeteria claim in his notice and commissionar of Cusom and Central Excise wrote in his letter that " in the defination of input services it dose'nt fall and there is not any judgment regarding this so we are rejected the claim as per rule".

if you have some idea regarding this pls email me so can we solve this problem.

thanks

Deepak

deepak.mishra @ ienergizer.com, ddeepakk.mishra @ gmail.com

Dayal (Gen. Manager - Indirect Taxation) (3434 Points)
Replied 23 November 2007

The canteen is operated by the company through contractor as per the requirements of the Factories Act (section 46). It is obligatory on the part of the company to provide the facilities in the canteen which will facilitate the employees of the company to have the hot foods in proper atmosphere. Thus, the facilities of the canteen is provided basically for the purpose of ensuring the employees to have food properly and of good quality who contribute to the production of the goods and or services. In respect of Office kindly check the act which makes it compulsory for the offices to provided canteen facility, Still you can insist that it is ana input service

(Guest)

Yes. Service Tax paid by a manufacturer of excisable product or tacable service provider is eligible as Cenvat Credit under Rule 2 (l) of Cenvat Credit Rules, 2004. There is no bar on expenses of factory canteen, as workers expenses are incurred in connection with the business. Hence, covered as per definition of input service under relevant rules.

(Guest)

dear sir,

my friend running a catering service in a pvt college.

can you tell me wether he pay serivice tax for his business and also the tax amount (%) for this?

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(Guest)

Cenvat credit of service tax paid on canteen facility at factory is not eligible as input credit as the same is not in connection with production of goods at the factory. There are a number of decisions of various tribunals on this issue, therefore, it is not advisable to take credit.

(Guest)

Whether rent a car used for night staff in call centre and service tax paid to car operator can be taken as set off ? any case law is available ? plz help

(Guest)

we are a manufacturing company. can we take the cenvat credit on service tax paid by us on advertisement services? if so at what percentage(%)?Pls provide with case laws or notification , if possible.

Vijay Kumar (Excise & Taxation) (23 Points)
Replied 01 March 2012

How can take credit of input serviec tax on canteen bill while bill paid by employee, Employer deducts amount from employee salary and pay it to contractor(service Privider) it means bill Paid by Employee finally

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CA Ganesh Karthik (Chartered Accountant) (368 Points)
Replied 01 March 2012

CESTAT - CENVAT Credit on LPG used for canteen - Held, providing canteen is an integral part of manufacturing activity of the assessee and as per the decision of Maruti Suzuki Ltd. (2009 -TMI - 34348 - SUPREME COURT) is also any input which has gone into manufacturing of final product directly or indirectly is entitled for input credit. Assessee entitled for the input credit on LPG which has gone to the canteen which is as per Factory Act is necessarily required to run their manufacturing activity.

This was a recent decision of the Tribunal.

The same logic can be applied for the contractors also I guess. Others may pls comment.