Service Tax Query - Cenvat

I want to ask you one thing that one of our client has booked lots of air tickets and vendor charges service tax approx Rs. 200/- to Rs. 300/- which client consider as input and i have no problem in this regard. But vendor is also providing air travel insurance from TATA AIG for which payment made by the vendor and then claim from the client. As the client take this insurance for different-2 period depends on period of his travelling time overthere. On receipt of travel insurance, there is service tax charged by TATA Aig. My question is that can the client avail the credit of such cenvat towards premium paid for air travel. <br> Regards, Harpreet

Replies (5)

as the insurance policy is issued directly by insurance company in favor of client, mere payment is made by vendor and claimed from client, there is no legal bar on availment of credit. 

However such claims must be catagorized under "eligible input service" in relation to their "taxable output services / taxable exisable goods"

Your query as I understand is whether service tax charged by TATA AIG is eligible for cenvat credit in the hands of your client and whether the credit can be set off against his tax liabiity on air travel services. Seems to be diffcult . The insurance service is used by the air passengers and not your client. It is just like dealer of sim cards. The service provided by the telecom company is not an input service for the dealer who sells the sim cards. It is an input service of the subscriber.

The Recent Buget has removed cenvat credit on many items, certian insurance is also included in the list, please check relevant sections. in my view it is difficult to get through if you have dept audit.

I mean to say  that a company is booking its air tickets through makemytrip.com or clearmytrip.com.

On that tickets there is service tax part of Rs. 103/- reflecting there. So my question is whether the company can avail the cenvat credit for the same or not?

 

My second question is that the company is booking internal air ticket through a reputed air travel agent and that agent also provide air travel insurance from Tata Aig. As Tata Aig charged service tax on premium amount the same was paid by the travel agent. After payment made by the agent, Agent make billing to the company. So my question is that whether we can avail the cenvat on insurance part or not???

 

Thanks & Regards,

Harpreet

1) CENVAT Credit of 103/- can be taken

2) With the revised definition of input services effective 1st April 2011, in my view, you will not be able to take the CENVAT credit of travel insurance of your employees. This would come under specific exclusion in the definition. 

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