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Cenvat on canteen service

08 November 2014

our company is engaging contractor for providing canteen facilities for workers. cost of meal is paid by workers themselves. canteen is under factories act.but no ac is installed. so it is not covered under exemption. therefore the contractor charges service tax on its service charge. can we take cenvat credit of the same?

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4 Replies

DEEPAK (STUDY ) (70 Points)
Replied 08 November 2014

Sir, the service tax is exempted by notification no. 25/2012-ST (Sl. No. 19). As the service tax itself is not payable, no question of cenvat credit.

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CA SHRAVANA DOTA (ACA) (125 Points)
Replied 08 November 2014

I agree with Mr Deepak. Please refer notification 14/2013- service tax dated 22/10/2013. Even if he has charged service tax, credit is not available. Canteen expenses incurred on account of employees is specifically excluded from the definition of Input Service. Refer Rule 2(l) of CENVAT Credit Rules,2004.

Ankit Agarwalla (CA) (281 Points)
Replied 08 November 2014

Exemption is available only when canteen has centralised heating or air conditioning. Since it is not there, the exemption doesn't apply.. Further, if the employees are paying for.the meal themselves, can the cenvat on service charge paid by the company to contracter for facilitating the canteen.work be.denied?

DEEPAK (STUDY ) (70 Points)
Replied 08 November 2014

Sir pl. Refer Sl. No. 19 of the exemption notification. All canteens without AC were already exempted. The further notification has only been issued only to cover AC canteens situated in the factory. Anyway cenvat credit is not available specifically when the cost of meals is being paid by workers themselves.