Availing input service tax credit for personal expenses

Sameera (Article assistant) (262 Points)

28 May 2015  

Hello everyone,

I have a doubt regarding service tax. Currently I am doing a statutory audit of a company.

I have an observation i.e. the company bifurcates the telephone charges into two types such as (1) Personal charges for the directors (2) The telephone expenses incurred by the co for its official purposes

But the company is taking credit on the first part also, i.e which the company is recovering from its directors which is purely a nature of personal expense and it does not meet the criteria of input service for providing the output service.

Point to be noted is the invoice is received in the name of the company.

Please confirm me whether the company is eligible to take credit on the portion which the company is recovering fro its directors with reference to rules. The portion recovered is exclusive of service tax.

Please clarify the doubt as soon as possible as we are in the verge of closure of the audit.

Thank you :)