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Cenvat credit available or not on manpower supply & recruitment agency services?

MITUL R SHAH (ACCOUNT OFFICER) (97 Points)

04 October 2016

Dear Sir/Madam, As i want to know that our Manufacturing company received housekeeping services from one contractor for Administrative department. Department located in factory. Category of service under service tax is "Manpower Supply & Recruitment Agency" Services. Kindly advice whether our company can availed cenvat credit or not on service tax paid under reverse charge Mechinisam. If service tax credit available than provide against which notification no. credit available. Thankyou in advance Regards Mitul Shah

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8 Replies

Harendra Kumar (Tax Advisor ) (1326 Points)
Replied 04 October 2016

Yes, you can availed the CENVAT benefit under RCM for received services under "Manpower Supply & Recruitment Agency" Services.

If you are facing any observation please forward the same.

Saket Agarwal (Chartered Accountant) (274 Points)
Replied 05 October 2016

First Proviso to Rule 4(7) of Cenvat Credit Rules allow the credit of service tax paid on reverse charge basis. The credit is allowed only after payment of the tax. Hence as soon as it is paid by your company to the government, it can take the credit thereof.

rishabh (B.Com) (81 Points)
Replied 05 October 2016

read notification no 97/8 of Excise and customs

MITUL R SHAH (ACCOUNT OFFICER) (97 Points)
Replied 05 October 2016

Thank you sir

The observation is that our company received housekeeping services and contractor raised invoice and mentioned in invoice that the housekeeping services provided for Administrative Building. Our company paid 100% service tax @ 15% but could not availed the cenvat credit.

Our senior employee said that this services not pertaining to Manufacturing of Final good or houskeeping not pertainig to Manufactuing building thus we can't availed the cenvat credit.

Kindly give your openion, whether we can availed the canvat credit or not.

Regards

Mitul Shah

Harendra Kumar (Tax Advisor ) (1326 Points)
Replied 05 October 2016

Further I can you advise that paid the service tax under RCM and get the benefit such amount paid by you as well as Cenvat Credit.

Example:

One month paid entire duty as cash/bank under RCM and availed the Cenvat Credit. Next month duty paid the Cenvat Credit only. It is dispute but according settle principle of law.

If you having any further observation please forward the same.

Saket Agarwal (Chartered Accountant) (274 Points)
Replied 06 October 2016

Dear Mitul,

There are numerous case laws to support the claim of CENVAT credit on housekeeping. Have mentioned a few below:

Godrej & Boyce Mfg. Co. Ltd. Versus Commissioner of Central Excise, Chennai -

2016 (9) TMI 538 - CESTAT CHENNAI

C.Ex & ST, LTU Chennai Vs Rane TRW Steering Systems [2015 (4) TMI 704 - MADRAS HIGH COURT] as well as decision in the case of Hinduja Foundries Ltd. Vs CCE, Chennai-I [2016 (4) TMI 326 - CESTAT CHENNAI]

MITUL R SHAH (ACCOUNT OFFICER) (97 Points)
Replied 06 October 2016

Thanks Sir,

I read the case law as you mentioned above (Godrej & Boyce Mfg. Co. Ltd. Versus Commissioner of Central Excise, Chennai).

In that case law they have talk about house keeping for factory premises. In my case contractor clearly mentioned that in invoice that the "service of housekeeping provided for Administrative Building" and Administrative building and factory building both are different building. But both building located at factory.

My question is Factory Premises include both Factory shed/Building and Administrative building.

Our senior employee said that if housekeeping provided for factory building than service tax paid on same expense will allowable as cenvat credit otherwise in case of Administrative building not available.

kindly clarify this issue and help me to solve this query

Saket Agarwal (Chartered Accountant) (274 Points)
Replied 08 October 2016

The definition of Input Service does not have any specification saying it should be used only in factory premise. If incurred in connection with the business, it should be sufficient to claim the credit.

Ofcourse, it should not be for personal use or for a particular employee. When incurred for director's house, it will obviously be not allowed.

Here is a reference to substantiate your calim: COMMISSIONER OF CENTRAL EXCISE, DELHI-III Versus HERO HONDA MOTORS LTD. - 2014 (5) TMI 724 - CESTAT NEW DELHI