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Cenvat credit on hotel bills

Ajay Aggarwal (Proprietor) (48 Points)

14 August 2012

Sir, We are a manufacturing concern. Can we take cenvat credit of service tax paid on hotel bills used by employees for official purpose?

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10 Replies

CA Sanjay Bag (CHARTERED ACCOUNTANT) (3345 Points)
Replied 14 August 2012

No, you can't ; as it is not related to your manufacturing activities.

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Prateek Agarwal (Sr. Executive - Finance & Accounts) (1732 Points)
Replied 14 August 2012

I think you can take credit as it is for official purposes.

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 14 August 2012

Originally posted by : Ajay Aggarwal
	Sir, We are a manufacturing concern. Can we take cenvat credit of service tax paid on hotel bills used by employees for official purpose?

if such service is qualified as input service, i.e the stay in hotel was in direct relation to providing taxable services, then only its admissible, official work is not an taxable event,

Ajay Aggarwal (Proprietor) (48 Points)
Replied 14 August 2012

The stay is done by marketing people for enhancing sales of the company or by higher management for business promotion

Prasad (Sr. Manager) (617 Points)
Replied 14 August 2012

Stay should be in connection with the manufacturing activity; Marketing cannot be an output serivce.

you will not be able take cenvat credit

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Ajay Aggarwal (Proprietor) (48 Points)
Replied 14 August 2012

However Input services definition includes services used in relation to advertisement or sales promotion, market research, activities relating to business. Will not the stay of marketing personal fall under above?

CA Sanjay Bag (CHARTERED ACCOUNTANT) (3345 Points)
Replied 14 August 2012

Get it clear Sir, whatever the activities related to your production (even up keep & maintenance of machinery) are eligible for CENVAT Credit

Ajay Aggarwal (Proprietor) (48 Points)
Replied 14 August 2012

So you mean service tax input on hotel bills, air tickets extra is not available?

CA Saiyum khan (Practicing CA) (690 Points)
Replied 14 August 2012

As per below given definition of input services the credit can be taken under the market research etc. but it would be disputable.

(l) "input service" means any service,-

(i) used by a provider of taxable service for providing an output service; or

(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal,
(This clause has been amended vide Notification 10/2008 C.E. (N.T.) - dated 01-03-2008)

and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;