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Service tax credit

CA Geetha (CA Job) (45 Points)

11 March 2013

Can a consultancy company clain service tax input on bank charges, air tickets, travel bills, staff welfare against the service tax payable?

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Vikas (CA) (1135 Points)
Replied 11 March 2013

For bank charges, there is no restriction on cenvat.

But for all the other expenses, if are pertaining to the personal use of the employee, then the same shall not be eligible as per the Definition of Input Service u/r.2(l) of the CCR, 2004., i.e., for staff welfare cannot be allowed.

For travelling expenses, there are decisions that may go in favour for claiming cenvat, if proved to be for official purpose.

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Prasad (Sr. Manager) (617 Points)
Replied 11 March 2013

Bank Charges No

Airtickets - is not claimable as there is an abatment given to airlines.

Staff welfare - there is a specific circular not able to find it, which restricts the cenvat credit on expenses relating to expenses towards employees

CA Geetha (CA Job) (45 Points)
Replied 11 March 2013

If a company has not claimed any input credit for April, May & June, where proportionate credit can taken based on the exempted services, can the company claim 3 months credit in the month of july?

whether the input credit is to be claimed against respective months services or against the services for the month of July?

Prasad (Sr. Manager) (617 Points)
Replied 12 March 2013

Since the credit is for the Previous period, i am of the opinion it is better to include the same in the opening balance.

Vikas (CA) (1135 Points)
Replied 13 March 2013

I beg to differ from the opinion provided above by Mr. Prasad.

Air Travel: The cenvat can be claimed, if incurred for the purpose of business. There are various judgements supporting the argument such as

1) ADC INDIA COMMUNICATIONS LTD. v. COMMR. OF C. EX., BANGALORE 2012 (283) E.L.T. 415 (Tri. - Bang.)

2) CALIBER POINT BUSINESS SOLUTIONS LTD. v. COMMR. OF S.T., MUMBAI 2010 (18) S.T.R. 737 (Tri. - Mumbai)

3) COMMISSIONER OF C. EX., AHMEDABAD v. FINE CARE BIOSYSTEMS 2009 (244) E.L.T. 372 (Tri. - Ahmd.)

Further, there is no such restriction for availing the cenvat credit in the same month of the date of invoice; you should only be required to verify, whether the same is eligible or not.