Hi Ashok, 

I guess the case of Wipro Ltd which you had quote is altogether diffrent from the matter under discussion. Further, the another case of karnatka HC of Graphite India Ltd you had quoted is not relating to renting of motor vehichle but it is relating to pick up charges from home to office place and for clarification, I am quoting the ruling of honable HC 

"question of law that arises for consideration in this appeal is as to whether the transportation services provided by the assessee to their staff to pick up from the residence to the factory and vice versa was input service and in or in relation to the manufacturing activity whether directly or indirectly of the final products and secondly whether the assessee is eligible for availment and utilization of the Cenvat credit towards the same."

Therefore, to me credit would not be available.

Please counter if, I am wrong. 

Regards

Hi..My points are as follows:

1 - In the wipro case, it is not directly related to input credit of hire charges. However, the refund of service tax on input services was allowed where in st paid on night transportation of employees was also claimed.

2 - The ledger you debit in books of accounts (cab hire/transp of employees) does not alter the fact you did not own the vehicle. In graphite india case, company hired vehicles for to and fro travelling of employees on which they claimed input credit which led to dispute.

My personal conclusion - we should NOT take credit because all explanations clearly amounts to renting of motor vehicle on which input credit is specifically prohibited....

Further, You have an option to take input credit only in the state of karnataka based on the strength of case law which cannot be objected by dept also as the judgment is binding on both assessee and tax payers in the state of karnataka

Ashok,

To me we need to book e both types of expenses seperately, whether it is Renting of Cab or Transportation service because both of them have all together different treatment under entire service tax regime.

Further, please dont forget to provision of section 66F (2) which says

Where a service is capable of differential treatment for any purpose based on its descriptttion, the most specific descriptttion shall be preferred over a more general descriptttion.

Regards