Cenvat on food to employees

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KAUSHAL (Querist)
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18 January 2016 A HOTEL IS PROVIDING FOOD TO ITS EMPLOYEES BY PURCHASING IT FROM OTHER RESTAURANT AND BILL RAISED BY RESTAURANT IS IN NAME OF HOTEL. CAN THE HOTEL CLAIM CENVAT CREDIT OF SERVICE TAX PAID ON THE FOOD. PLZ SPECIFY THE SOURCES. THANKS

Ashish Chaudhary

Ashish Chaudhary (Expert)
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19 January 2016 Employee related expenses are ineligible for credit as per exclusion clause of the definition of input service. Refer following exclusion clause

"such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee"

The exclusion list specifically includes catering services. Moreover, it begins with "such as" which indicates that the expenses of similar nature when primarily used for personal consumption of employees, ineligible for credit.

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