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Service tax credit on telephone bills

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PANKAJ SHARMA

Accounts Executive

200 Points Posted on 05 July 2013

Pls suggest ---------

A company is Dealing in Trading Activities as well as providing Services

Say Trading Activities Constitute 90% and Service Activities Constitute only 10% of Total Turnover of Company.

But as we are using Telephones/Mobiles(including those of Employees) for company as a whole, what is basis for taking CENVAT CREDIT of Service Tax on such Telephone Bills.

1) whether Full CCR is admissible.

2) whether propotionate CCR is admissible.

Pls suggest which Section/Rule to refer in this regard

Replies (3)

Prabhat Kumar

Advocate & Consultant

1912 Points Posted on 05 July 2013

Trading activity is exempted from the Service Tax,So you can not take any credit in that regard.However Cenvet credit in respect of taxable service can be taken as input service if we established the nexus between telephone charges and output service.Here we will have to follow Rule 6 of the Cenvat Credit Rule.

PANKAJ SHARMA

Accounts Executive

200 Points Posted on 05 July 2013

Prabhat Sir,

Thanks for the reply, but here we are using Telephones/Mobiles for both the activities, they are not connected directly to Trading or Taxable Service, Then what to do in dat case.

There is no direct nexas between Input Service and Taxable Service, as i understand.

Pls guide ........

Dipjyoti Majumdar

CA in service & CS. dipmaj@

3506 Points Posted on 05 July 2013

If there is no nexus between input service and output service cenvat credit is not available. It may be noted that credit is allowed even if the relation is indirect.

Thanks,