Cenvat credit for canteen service

Dear Expert,

Can we take Cenvat credit of Canteen service provided in our factory.

Pl. reply.

Thanks in advance.

Aashish

Replies (3)

Rule 2(l) of CCR 2004, specifically deny the credit of service tax on outdoor catering, if canteen is in the factory and services are provided from the factory itself credit is available.

Agree with Mr. Garav.

Definition of input service u/r 2(l) of CENVAT Credit Rules, 2004 has been amended vide Notification No.3/2011-CE(NT) dated 01.03.2011. Relevant part is produced below:

"„(l) “input service” means any service, -
.........................but excludes services,-
(C) 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;"

Hence, it seems that only if the canteen is whithin the factory as employee welfare & cost of services are borne by the Factory itself and not by the employees, credit may be allowed.

Nagpur Bench of the Bombay High Court in Commissioner of Central Excise, Nagpur v/s. Ultratech Cement Ltd. observed that, once the service tax is borne by the ultimate consumer of the service, namely the worker, the manufacturer cannot take credit of that part of the service tax which is borne by the consumer.

Thanks sir

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